12 Best Beauty Stocks to Buy According to Hedge Funds

7. Ulta Beauty Inc. (NASDAQ:ULTA)

Number of Hedge Fund Holders: 40

Revenue Growth Rate (year-over-year): 9.78%

Ulta Beauty, Inc. (NASDAQ:ULTA) presents an exceptional chance in the cosmetics industry. The company sells beauty items through stores located in strip malls across the country. The company has an advantage over other brick-and-mortar retailers and other beauty retailers like Sephora because of its hair salons, which also help draw customers into the stores.

Over the years, the company has consistently increased comparable sales and its stock has consistently performed well. However, 2024 was a difficult year for the company since it had to deal with competition from mass-market retailers like Kohl’s and CVS. In order to expand its business, Ulta Beauty, Inc. (NASDAQ:ULTA) also signed a contract with Target to open 100 stores inside Target locations over the coming years. It continues to benefit from many competitive advantages, such as its superstore retail model, reward program, extensive variety, and hair salons, despite its recent challenges.

The third-quarter fiscal 2024 net sales of Ulta Beauty (NASDAQ:ULTA) were $2.53 billion, up 1.7% year over year, mostly due to the opening of new stores, however, this was partly offset by a drop in other revenue. A 0.1% increase in average ticket size and a 0.5% increase in transactions led to a 0.6% growth in comparable sales. Even with increased SG&A costs, operating income was $318.5 million, or 12.6% of net sales. Diluted EPS increased from $5.07 to $5.14, while net income hit $242.2 million.

New store contributions and other revenue growth generated a 2% increase in net sales to $7.8 billion for the first nine months. The company displayed confidence in its long-term growth strategy by continuing to expand, adding 57 new stores in 2024, and repurchasing $764.5 million worth of shares. Ulta Beauty, Inc. (NASDAQ:ULTA) appears to be on track for more expansion, given the company’s unique business model.

Ken Griffin’s Citadel Investment Group was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 623,500 shares worth $242.62 million as of Q3.