A Trio of Intriguing Reports

 | Jun 03, 2012 | 5:00 PM EDT
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My growth screens are a mess right now, and I can honestly say there's not one single stock out there that I'm interested in buying. When the market is in a distribution phase like it is now, all stocks are vulnerable -- large-caps and small-caps, growth and value.

There are, however, some earnings reports this week that have my interest, including United Natural Foods (UNFI), Ulta Beauty (ULTA) and Lululemon Athletica (LULU). All three stocks have rewarded shareholders nicely in recent months, thanks to a consistent track record of execution.

United Natural Foods-- a distributor of natural, organic and specialty foods -- is set to report Tuesday before the open. The company, with market capitalization of nearly $2.4 billion, caters to supermarket chains, natural product superstores, independent retail operators and foodservice firms.

The stock had been holding up well ahead of earnings, but it finally fell below its 50-day simple moving average (SMA) Friday in above-average volume. That the stock was able to hold above this support level for such a long time was an impressive accomplishment, but a weak market eventually takes everything down with it.

United Natural Foods isn't showing the robust growth of Ulta Beauty and Lululemon, but its rate is still respectable. Quarterly profit is seen rising 17% to $0.56 a share, with sales expected up 12% to $1.35 billion. Note that sales growth has been decelerating slightly in recent quarters. That's not the best of signs, but it's not a deal breaker either.

The company has a longer-term annual earnings growth rate of 10%, but growth is expected to pick up, with a projected climb of 14% in 2012 and 14% in 2013.

I believe there's a good chance for a solid quarter at United Natural Foods -- but, like just about every other stock out there, this one looks as though it's ready to build a base for a while as the major averages continue to consolidate. If results impress and buyers come into the stock, I still wouldn't be a buyer with the broad market acting as weakly as it is.

United Natural Foods (UNFI) -- Daily
Source: StockCharts.com

Meanwhile, Ulta Beauty is scheduled to report first-quarter results after the close Tuesday. At the end of April, the beauty-store operator had 467 stores in 44 states. Fundamentals are outstanding at Ulta Beauty, and growth prospects look great. This year, annual profit should be up 32% from 2011, according to consensus.

Specifically, the Street estimate calls for a profit of $0.53 a share, up 43% from a year earlier. Sales are seen rising 23% to $473.9 million. Same-store sales growth, which excludes sales at newly opened stores, continues to be impressive. When Ulta announced fourth-quarter earnings in March, same-store sales rose a stout 11.5%.

Still, recent price and volume trends in Ulta are cause for concern, given that it's been meeting with resistance at its 50-day SMA. The stock crashed below the support level April 24, and it's tried to reclaim the line repeatedly since then, but has failed each time. To its credit, the stock did show good supporting action May 8, when it rallied bullishly off its lows in heavy volume. Clearly there were big buyers in the stock that day. Still, after a huge price move already since March 2009, the stock is starting to look tired to me. That is, chances for lower prices ahead seems to outweigh those for a further climb.

Ulta Beauty (ULTA) -- Daily
Source: StockCharts.com

Finally, Lululemon is another great growth story in the market. The athletic-apparel maker, which specializes in yoga wear, is due to report Thursday before the open. The company has also been growing earnings at a rapid clip.

Quarterly profit is seen rising 36% from a year earlier to $0.30 a share, with sales seen up 45% to $270.6 million.

Lululemon isn't cheap: The stock trades at 55x trailing earnings and 33x forward earnings. But fast-growers like Lululemon often get a premium valuation. Of course, it will be held to a high standard when it reports Thursday -- and results should be solid. But, again, a market under distribution isn't working in Lululemon's favor. I wouldn't be surprised to see the shares ultimately undercut their recent low of $66.01. Its 200-day SMA, a longer-term support level, is currently around $60. Shares closed Friday at $69.30, down $3.34 in above-average volume. The stock also recently tried to reclaim its 50-day SMA but was turned away.

Lululemon (LULU) -- Daily
Source: StockCharts.com

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