Why this technical analyst thinks Ulta Beauty's (ULTA) shares could surge soon

NASDAQ: ULTA | Ulta Beauty, Inc. News, Ratings, and Charts

ULTA – Analyst Todd Gordon thinks Ulta Beauty’s stock will shine next month.

Beauty stocks have showed off big gains this year. Estee Lauder and Ulta Beauty are each up at least 35% since January, while Coty has soared 108%.

But recently, Ulta Beauty, Inc. (ULTA - Get Rating) Beauty’s rally is starting to show wear and tear. The beauty store chain, which had previously seen a boost from its sale of Kylie Jenner cosmetics, has turned flat for the quarter and is the weakest performer of the three in the past month.

Todd Gordon, founder of TradingAnalysis.com, says it will start to shine again in the next month.

“It’s been in a nice bit of consolidation here,” Gordon said Thursday on CNBC’s “Trading Nation. ”

“The stock looks like it could break through some resistance here,” he added. “You can see we’ve been on the approach up to that breakout point about $350.”

Ulta bumped up against $350 on Thursday, though closed just below it. The stock had briefly moved above that level in late May, but failed to hold there. It has not traded firmly above that level since April, a stretch that marked its all-time peak.

“What you’ll see here is we’ve come very close to that breakout point, have pulled back and we’re now starting to mount another attack on that breakout zone,” said Gordon. “Let’s structure an options trade such that the reward would be larger than the risk, anticipating a breakout of that downtrend resistance.”

Gordon is buying the 350 call and selling the 365 call, an options bet that takes advantage of a move out of its resistance band. This spread is a prediction Ulta Beauty, Inc. (ULTA - Get Rating) can move as high as $365 by July 19 expiration, a 5% increase and a rally that would take it to record highs.







Ulta Beauty, Inc. (ULTA - Get Rating) shares were trading at $353.94 per share on Friday afternoon, up $4.13 (+1.18%). Year-to-date, Ulta Beauty, Inc. (ULTA - Get Rating) has gained 44.56%, versus a 16.37% rise in the benchmark S&P 500 index during the same period.







This article is brought to you courtesy of CNBC.

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!

Top Stories on StockNews.com

NASDAQ: MAT | Mattel, Inc. News, Ratings, and Charts

Mattel (MAT) plummets as toy mogul loses interest in potential merger

Mattel’s stock falls after toy mogul Isaac Larian loses interest in merging his company with Mattel
NYSE: ORCL | Oracle Corporation Common Stock News, Ratings, and Charts

Oracle (ORCL) shares surge after-hours following earnings report

Oracle shares rise after beating expectations
NYSE: X | United States Steel Corporation Common Stock News, Ratings, and Charts

Why U.S. Steel (X) shares got an upgrade from a Vertical Group analyst

Vertical Steel thinks U.S. Steel shares could rise due to big production cut
NYSE: SHOP | Shopify Inc. Class A Subordinate Voting Shares News, Ratings, and Charts

Shopify (SHOP) shares soar after unveiling plans for a new distribution network

Shopify hit an all-time high after announcing plans for distribution network
NASDAQ: NFLX | Netflix, Inc. News, Ratings, and Charts

New Adam Sandler movie sets a Netflix (NFLX) viewing record

Adam Sandler and Jennifer Aniston's Netflix, Inc. flick "Murder Mystery" may have broken viewing records.

Read More Stories

More Ulta Beauty, Inc. (ULTA) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All ULTA News
Page generated in 1.8223 seconds.