ULTA's options are attractively priced, to boot
Cosmetics stock Ulta Beauty Inc (NASDAQ:ULTA) is exactly two weeks removed from a record high, when it raced out to $359.69 on April 17. While the shares have taken a breather since then, there's reason to believe this could be a big summer for ULTA, if history is any indicator.
That's because Ulta Beauty stock recently found itself on our list of the best stocks to own between May and October, per data from Schaeffer's Senior Quantitative Analyst Rocky White. Looking at eight years' worth of returns, ULTA averages a gain of 23.5% over the past 10 years during this six month stretch, the best on the list. Further, the security has ended the month higher 90% of the time.
At last check, ULTA was down 1.9% to trade at $342.61. That means a move of similar magnitude would put the stock around $422 by October, uncharted territory for the cosmetics name. Today's pullback has found support at the 40-day trendline, an area that cushioned an early March bear gap. Since a Christmas Eve bottom near $224, the security has added 53%.
Those that want to take advantage of ULTA's seasonality trend this summer may want to consider options. Specifically, the security's Schaeffer's Volatility Index (SVI) of 25% stands stands in the 9th percentile of its annual range. This means that near-term options are currently pricing in low volatility expectations.
Plus, the stock had been an attractive target for premium buyers over the last 12 months, according to its Schaeffer's Volatility Scorecard (SVS) of 98 (out of a possible 100) -- which meant the shares had consistently realized greater volatility than what ULTA option premiums had priced in.