The first stock we bought for the Portfolio? Ulta Beauty.
So far, it has been a very good investment
Let’s take you through the investment rationale
Ulta Beauty is a Quality Cannibal Stock. It’s the largest specialty beauty retailer in the United States known for its wide range of beauty products and services. Ulta Beauty offers more than 25,000 products from more than 600 beauty brands. The company has a low capital intensity and healthy balance sheet.
Currently, Ulta Beauty trades at the cheapest valuation level it has traded at over the past decade. Over the next decade, the company could buy back up to 50% of its outstanding shares. This is beneficial for existing shareholders. The company can be seen as a Compounding Machine as it has grown its revenue at a CAGR of 17.6% over the past 15 years and returned more than 25% per year to shareholders since its IPO in 2007. Our valuation models indicate that the stock is undervalued.
Every company within the Portfolio gets a Quality Score based on 15 metrics.
Finally, the company gets a ‘Total Quality Score’ which is simply calculated by taking the sum of the score of all 15 metrics and dividing it by 15.
As you can see in the table below, Ulta Beauty gets a Total Quality Score of 8/10.
The full investment case of 33 pages tells you everything you need to know about Ulta Beauty.
You can download it here:
Full investment case Ulta Beauty
We bought Ulta Beauty in Octbober 2023.
Since then, the stock is up +27%.
As a result, I think there are more attractive investment opportunities within our Portfolio today.
You want to find out which ones?
Become a Partner of Compounding Quality to find out:
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Happy Compounding!
Pieter (Compounding Quality)
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