ULTA - Ulta Beauty: Great Business Greater Opportunity

2024-05-28 09:46:03 ET

Summary

• Beauty is one of the most dependable industries, and Ulta Beauty, Inc. is not going anywhere.
• Any short-term pain is temporary and should not affect the long-term earnings power of the business. Ulta Beauty, Inc. is a classic value stock.
• This is a company with massive free cash flow, cash reserves, zero debt, $2B stock buyback in place, and has grown revenue by 18.4% over the past seventeen years.
• I value Ulta Beauty in two ways, as well as list crucial risks to consider.

Thesis

The human desire to be desirable will always exist.

Ulta Beauty, Inc. ( ULTA ) solves how to be loved the same way Costco ( COST ) solves how to be fed.

Ulta doesn’t sell beauty products.

They sell beauty.

Big difference.

Ulta

Now that you all have seen my girlfriend in the main image, it's worth mentioning that Ulta has been a 100-bagger stock going back to its 2009 low of $4.11 per share. In that time span, the company’s EPS has increased 60-fold. Simply put, Ulta has been one of the greatest investments in recent history. As a result, its stock has historically traded at a significant premium, as its average P/E during this time span has been 30x....

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