itstargetnews
Future returns remain the main concern of investors. However, looking at past stock returns can also provide wisdom. That’s because it can help you see what the company did and didn’t do and how the stock price reacted. It is also important to compare the profitability with a suitable one referent.
Moving on to a well-known retail name, how rich it is The ultimate beauty (NASDAQ: ULTA) created for shareholders over the past five years?
Five years ago, Ulta’s stock was trading at about $267 a share and closed at more than $415 on Jan. 8. This means an appreciation of 57.6%. Your $5,000 investment would have grown to $7,878. Ulta Beauty stock doesn’t pay dividends, so this doesn’t factor in performance.
That sounds impressive. But how would you have done it if you had invested passively in an index like the S&P 500? The index returned 95.5%, including dividends, during that time. So your $5,000 investment would have grown to $9,776.
Ulta Beauty’s stock has fallen over the past year. It was fast growing, but sales have been slow lately. People have cut back on spending as they have had to pay more for basic items like food and rent.
Its fiscal third-quarter same-store sales (comps) rose just 0.6% in the period ending Nov. 2, 2024. Most of the shopping gains came from increased traffic, showing that shoppers are drawn to Ulta’s stores and website.
Ulta offers products like cosmetics, skin care and fragrances at different price points. That should help the company until inflationary pressures ease and consumers looking for lower-priced items feel more comfortable spending money.
The stock is trading at a price-to-earnings (P/E) ratio of 17, compared with about 20 a year ago. That’s well below the S&P 500’s P/E multiple of 30. With stocks down on cyclical concerns, five years from now long-term investors can look back and be satisfied with returns and wealth created
Before you buy stock in Ulta Beauty, keep this in mind:
The Motley Fool Stock Advisor The team of analysts has just identified what they think they are 10 best stocks because investors are buying now… and Ulta Beauty was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $832,928!*
Stock advisor offers investors an easy-to-follow plan for success, including guidance on building a portfolio, regular analyst updates, and two new stock picks every month. The Stock advisor service has more than quadrupled the return of the S&P 500 since 2002*.
