Warren Buffett and Selena Gomez have noteworthy similarities in their investment choices.
Selena Gomez, a former Disney star, and Warren Buffett, a 94-year-old acclaimed investor, intersect in their investments within a particular sector. While Buffett is renowned for his financial acumen and Gomez for her influence in entertainment, they both have interests in the cosmetics field.
Celebrities often bridge their public personas with business ventures to create a tangible connection with their audiences. Selena Gomez exemplifies this by founding Rare Beauty, a cosmetics company that reportedly generates between $350 million and $400 million in annual revenue and boasts a significant following of 7.6 million on Instagram. This success underscores her effective foray into the business world, utilizing her celebrity status to bolster the brand’s visibility and influence.
Similarly, Warren Buffett, through his investment firm Berkshire Hathaway, has made significant moves within the cosmetics industry. According to Berkshire Hathaway’s latest 13F filing, the firm took a substantial position in Ulta Beauty, amounting to roughly a quarter-billion dollars last quarter. Buffett has a history with businesses related to fashion and beauty, owning brands like Ben Bridge, Borsheims, Helzberg, Brooks, H.H. Brown, and Justin Brands.
Ulta Beauty, with its nearly 1,400 brick-and-mortar stores, offers over 25,000 products across 600 brands, reaching a broad customer demographic. Its collaboration with Target further enhances its market reach and brand strength.
Despite facing challenges such as decelerating same-store sales and heightened competition, Ulta Beauty has shown resilience in its cash flow growth. The company’s price-to-earnings ratio remains the lowest among its industry peers, including e.l.f. Beauty, Estée Lauder, and L’Oréal, suggesting potential undervaluation.
Considering Ulta’s strengthening cash flows, ongoing share buybacks, and a robust brand, there is a compelling case for its stock being undervalued. The current consumer resilience might imply forthcoming improvements in sales metrics, which may positively impact Ulta’s performance in the near future.
Adam Spatacco, who authored this analysis, holds no positions in any of the mentioned stocks. The Motley Fool has positions in and recommends Ulta Beauty, Walt Disney, and e.l.f. Beauty. The Motley Fool maintains a disclosure policy.
