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Why Buffett's Bet on Ulta Could Mean Big Gains for e.l.f. Investors
The best-performing brand in Buffett's favorite beauty chain
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Warren Buffett shocked the investment world when he revealed earlier this month that Berkshire Hathaway had sold nearly 50% of its massive stake in Apple ($AAPL). Shares of the tech giant plunged as much as 10% following this announcement before recovering from the steep selloff.
Then, in another regulatory filing a few days ago, Berkshire revealed a new investment in beauty company Ulta Beauty ($ULTA) — a classic value bet after the stock suffered a significant sell-off this year amid slowing demand. Buffett’s investment in Ulta offers a 'big stamp of approval' not only to the beauty retailer but also to the beauty industry in general. And one of the fastest-growing companies in the space is Millennial and Gen Z favorite, e.l.f. Beauty ($ELF).
$ELF has been one of the best-performing stocks in recent years, amid soaring consumer demand. But after hitting new highs earlier this year, ELF shares have taken a breather, falling 25%.
The main reason behind this dip is likely profit-taking, as the business is booming. ELF continues to grow rapidly and profitably, taking market share from incumbents. The solid fundamental performance and significant growth potential make $ELF a very attractive investment at current prices. Let’s take a deeper dive.