While the SPX tends to slide in September, ULTA has averaged the biggest monthly gain.
The month of September is nearly upon us, and while that has historically meant a negative return for the S&P 500 Index (SPX), several stocks could buck the broad-market trend. Looking back 10 years, the 25 stocks below have averaged the best monthly gains in September. In a league of its own at the top of the list is cosmetics peddler Ulta Beauty Inc (NASDAQ:ULTA), which is set to report second-quarter earnings after the close on Thursday, Aug. 30.
ULTA stock has ended the month of September higher nine of the past 10 years — only one of two stocks to boast that record — per Schaeffer’s Senior Quantitative Analyst Rocky White. What’s more, the security has averaged a healthy monthly gain of 14.55% — more than double the second-highest average return on the list. At last check, ULTA stock was fractionally higher at $240.87. A similar September pop would place the shares around $275.92 — in new-high territory.
After ULTA’s last rejection in the $260 region in mid-July, the shares pulled back to familiar support in the $235 area. This level contained the security’s pullback in early July, and represents a 38.2% Fibonacci retracement of Ulta stock’s rally from its October lows just below $188 to its May 21 annual high of $261.40. Further, the security’s 160-day moving average is ascending into the area, and the region represents a 25% pullback from the equity’s all-time high of $314.86 touched in June 2017.
Despite the beauty stock’s stellar September record, short-term options traders are much more put-heavy than usual right now. Ulta sports a Schaeffer’s put/call open interest ratio (SOIR) of 2.83, indicating that puts nearly triple calls among options expiring within three months. Further, this ratio is in the 98th percentile of its annual range, indicating near-term traders have rarely been more put-biased in the past year. Should ULTA once again rocket higher next month, an unwinding of pessimism in the options pits could add fuel to the stock’s fire.