RiverPark sees a value in Ulta Beauty Inc (NASDAQ:ULTA) despite the company was a detractor for the fund for the quarter. In its Q1 Investor Letter, RiverPark discussed its investment thesis on ULTA. The fund said that the company is “the largest beauty retailer in the U.S. with over 1,000 specialty stores that provide a one-stop shopping experience” and has favorable customer demographics and “a differentiated retail format, which has been taking share in the fragmented $70 billion beauty products market.” Let’s take a look at the fund’s thoughts on ULTA.
ULTA shares were also a detractor for the quarter as investors continue to fear that the company is losing competitive positioning within the beauty retail industry. This extended the period of underperformance for ULTA’s shares which, despite a strong stock market in 2017, declined over 12% last year. While competitive issues are not new to this category or the company, this narrative has resulted in a dramatic decline in ULTA’s valuation over the past year (from over 30x next year’s earnings to less than 20x) that gave us the chance to initiate and continue to build our position in what we believe to be one of the few growth winners in the new retail bricks and mortar landscape.
Despite the increased focus of other retailers (both discount and department stores) on the beauty sector as well as on-line competitors (such as Amazon) over the past several years, ULTA’s results have remained exceptional with revenue compounding in excess of 20% per year since 2010 with same store sales growing double digits annually during this time. There has been little deceleration in these results of late as the company reported 9% growth in same store sales, and revenue and EPS grew 23% and 22%, respectively, in the company’s most recent quarter. ULTA has become the largest beauty retailer in the U.S. with over 1,000 specialty stores that provide a one-stop shopping experience including prestige, mass and salon products while also offering a full suite of salon services. The company has favorable customer demographics (high income consumers) and a differentiated retail format, which has been taking share in the fragmented $70 billion beauty products market.
Management has executed extremely well, delivering consistent annual revenue growth while also expanding margins, which has resulted in a 28% compound annual EPS growth rate over the past five years. The company will also be a major beneficiary of tax reform as its tax rate is expected to decline over 30% for 2018 and beyond. The stock’s underperformance, combined with strong fundamentals and a materially lower tax rate has brought the stock’s forward valuation down from a peak of over 30x forward earnings during 2016 to what we project to be under 15x earnings based on our estimates for one-year forward earnings. We built ULTA into a core position during the later months of 2017, added to our position again during the quarter, and would look to add further during 2018 should this value/growth divergence continue.
Credit: Mike Mozart/Flickr/
Ulta Beauty Inc (NASDAQ:ULTA) is a chain of beauty stores headquartered in Bolingbrook, Illinois. The company sells cosmetics and skincare brands, men’s and women’s fragrances, and haircare products.
On Friday, ULTA closed down 1.50% at $253.06. Its opening price on the last trading day was $255.23. The stock declined 16.55% over the past 12 months, while its year-to-date performance jumped 11.88%. Over the past six months, the stock gained 18.87%.
Meanwhile, ULTA isn’t very popular stock among hedge funds tracked by Insider Monkey. The stock was held by 34 funds in their portfolio as of the end 2017.
Alright, listen up, because the AI game is changing, and you don’t want to get left behind.
Yeah, the chip guys, like Nvidia, they had their moment. The first AI wave? They rode it high.
But guess what? That ride’s over. Nvidia’s been flatlining since June 2024.
Remember the internet boom? Everyone thought Cisco and Intel were the kings, right? Wrong. The real money was made by the companies that actually used the internet to build something new: e-commerce, search engines, social media.
And it’s the same deal with AI. The chipmakers? They’re yesterday’s news. The real winners? They’re the robotics companies, the ones building the robots we only dreamed about before.
We’re talking AI 2.0. The first wave was about the chips, this one’s about the robots. Robots that can do your chores, robots that can work in factories, robots that will change everything. Labor shortages? Gone. Industries revolutionized? You bet.
This isn’t some far-off fantasy, it’s happening right now. And there’s one company, a robotics company, that’s leading the charge. They’ve got the cutting-edge tech, they’re ahead of the curve, and they’re dirt cheap right now. We’re talking potential 100x returns in the next few years. You snooze, you lose.
Here’s the catch (it’s a good one): To uncover this sleeping giant, you’ll need our exclusive intel.
We want to make sure none of our valued readers miss out on this groundbreaking opportunity!
That’s why we’re slashing the price of our Premium Readership Newsletter by a whopping 70%.
For a ridiculously low price of just $29.99, you can unlock a year’s worth of in-depth investment research and exclusive insights – that’s less than a single restaurant meal!
Here’s why this is a deal you can’t afford to pass up:
• Access to our Detailed Report on this Game-Changing AI Stock: Our in-depth report dives deep into our #1 AI stock’s groundbreaking technology and massive growth potential.
• 11 New Issues of Our Premium Readership Newsletter: You will also receive 11 new issues and at least one new stock pick per month from our monthly newsletter’s portfolio over the next 12 months. These stocks are handpicked by our research director, Dr. Inan Dogan.
• One free upcoming issue of our 70+ page Quarterly Newsletter: A value of $149
• Bonus Reports: Premium access to members-only fund manager video interviews
• Ad-Free Browsing: Enjoy a year of investment research free from distracting banner and pop-up ads, allowing you to focus on uncovering the next big opportunity.
• 30-Day Money-Back Guarantee: If you’re not absolutely satisfied with our service, we’ll provide a full refund within 30 days, no questions asked.
Space is Limited! Only 1000 spots are available for this exclusive offer. Don’t let this chance slip away – subscribe to our Premium Readership Newsletter today and unlock the potential for a life-changing investment.
Here’s what to do next:
1. Head over to our website and subscribe to our Premium Readership Newsletter for just $29.99.
2. Enjoy a year of ad-free browsing, exclusive access to our in-depth report on the revolutionary AI company, and the upcoming issues of our Premium Readership Newsletter over the next 12 months.
3. Sit back, relax, and know that you’re backed by our ironclad 30-day money-back guarantee.
Don’t miss out on this incredible opportunity! Subscribe now and take control of your AI investment future!
No worries about auto-renewals! Our 30-Day Money-Back Guarantee applies whether you’re joining us for the first time or renewing your subscription a year later!
I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.
We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…
Should I put my money in Artificial Intelligence?
Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.
Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…
But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.
That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…
And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.
He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.