Diamonds and Dogs

5/27/16

This stock looks as beautiful as their products. Ulta Salon Cosmetics & Fragrance (ULTA) is jumping 8% to a new all-time high after posting strong earnings. The beauty retailer has been on a roll up 319% over the last five years. The Illinois based company posted earnings of $1.45 per share easily beating Wall Street's expectations of $1.29 per share. Revenue rose 23.7% to $1.07 billion beating expectations. Retail comparable sales rose 13.9% year over year, while e-commerce sales surged 38.8%. Ulta Salon certainly isn't feeling the ill effects of many of the other retailers.

The network is down! Not actually, but today's dog is seeing slowing growth. Palo Alto Networks (PANW) is down 12% following forecasted earnings and sales that missed growth targets. Palo Alto said it expects earnings per share in the current quarter of between 48 cents and 50 cents, up from 28 cents a year earlier. The company expects revenue in the quarter ending July 31 of between $386 million and $390 million, growing between 36% and 37%. Sounds great for most companies, but not for stocks trading for 50 times 2017 earnings. And that's after the drop today. If the PE drops to 40, the stock would have to drop another 20%. Look out below.