Warren Buffett’s 10 New Stock Picks

3. Ulta Beauty Inc (NASDAQ:ULTA)

Shares held by Berkshire Hathaway: 24,203

Stake Acquired: Q2 2024

Also in the second quarter of this year, Berkshire Hathaway added beauty retailer Ulta Beauty Inc (NASDAQ:ULTA) to its portfolio. However, in the following three months, the fund disposed of almost the entire position by selling 665,903 shares.

Berkshire initiated a stake after the stock dipped after the company provided lower than expected guidance for the current year in March and later in April at an investor conference, the company’s management projected that the first quarter results would be at the lower end of the guidance due to slower sales.

For the latest quarter, ended November 2, Ulta Beauty Inc (NASDAQ:ULTA) reported EPS of $5.14 and revenue of $2.53 billion, both topping the expectations by $90.61 and $32.51 million, respectively. Moreover, the retailer inched higher its full-year guidance and now expects between $11.1 billion and $11.2 billion in sales and EPS between $23.20 and $23.75. The company saw a comparable sales growth of 0.6% on the year, which was substantially lower from 4.5% growth seen in the same period of last year. The company has also been investing in expanding its business with 57 new stores opened in the first nine months of its fiscal 2024.

Trading at almost 19 times its forward earnings, Ulta Beauty Inc (NASDAQ:ULTA) is no longer trading at the discount seen earlier this year. Analysts are split between Hold and Buy ratings. For example, following the earnings release, UBS maintained a Buy rating and hiked the price target to $490, while Citigroup raised the price target to $450 and maintained a Neutral rating.