TheRealWalters

Long ULTA Short DK YTD 185%

Long
ULTA/DK  
ULTA/DK  
ULTA is still rising, albeit on lower volume in recent time. The beauty store provider is still generating strong earnings growth with a 3 Year E.P.S Growth Rate of 25% and an E.P.S % Chg (Last Qtr) of 39%. This is accompanied by a 3-Year Sales Growth Rate of 21% and a Sales % Chg (Last Qtr) of 24%. This shows that an increase in sales is driving E.P.S growth, which is an important factor. Whilst ULTA has experienced lower than average trading volumes since the beginning of June 2016 the relatively small free float of 61 million shares means that the volume is still sufficient to drive the price higher. Trading at all-time-highs doesn't seem to bad when it's doing so on a P/E of 48, a modest premium for a growth stock of this calibre.

Delek U S Holdings Inc (DK) is a US oil refiner, operating largely in southern US states and is doing so at a loss. The stock is down 51% YTD, sales are declining (3-Year Sales Growth Rate -15%, Sales % Chg (Last Qtr) -4%) and earnings are too (3 Year E.P.S Growth Rate -46% and E.P.S % Chg (Last Qtr) -378%). The latest quarterly earnings report was headlined by a slightly improving cash balance and an announcement of cash proceeds from tax refunds and business interruption proceeds, which does not demonstrate improving business fundamentals. Improving the cash balance is important to Delek, considering their debt to equity is around 76% at the most recent report.

With a P/E ratio of 80 and the stock trading around $12, there is certainly plenty of downside remaining.
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