Why Shares of Ulta Salon, Cosmetics, & Fragrance Inc. Got Freshened Up

Is this meaningful? Or just another movement?

Jun 11, 2014 at 6:14PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Ulta Salon, Cosmetics & Fragrance (NASDAQ:ULTA) were looking rejuvenated today, gaining as much as 16% and finishing up 14% after turning in a strong first-quarter earnings report.

So what: The beauty-products and salon chain beat estimates across the board, and delivered robust growth in all three key revenue streams: organic same-store sales, e-commerce, and new stores. Earnings per share improved from $0.65 to $0.77, beating estimates of $0.74 as revenue jumped 22% to $713.8 million, topping expectations of $700 million. Same-store sales improved briskly, up 8.7% in the quarter, which includes a 72% jump in online revenue.  

Now what: Profit growth was slower than top-line growth as the company works on converting members of its loyalty program to ULTAmate rewards program, which forced gross margin lower by 50 basis points to 34.5%. For the current quarter, management expects earnings per share of $0.78-$0.83 against the Wall Street view of $0.82, but its revenue forecast of $706 million to $717 million was ahead of the consensus at $704 million. UIta shares are priced for growth, and the company has disappointed the market before with its financial results, but during a quarter where many retailers struggled, it bested expectations and appears to be firing on all cylinders, with an aggressive store expansion ensuring continued growth. With shares still trading at a relative discount, now may be a good time to get in.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Ulta Salon, Cosmetics, & Fragrance. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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