Is it Safe to Invest in Ulta Beauty (ULTA)?

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ClearBridge Investments, an investment management firm, published its “Large Cap Growth ESG Strategy” second quarter 2022 investor letter – a copy of which can be downloaded here. The ClearBridge Dividend Strategy outperformed its S&P 500 Index benchmark during the second quarter. On an absolute basis, the Strategy had gains in one of the 11 sectors in which it was invested for the quarter: the health care sector. The IT, financials and materials sectors, meanwhile, were the main detractors. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, ClearBridge Large Cap Growth ESG Strategy mentioned Ulta Beauty, Inc. (NASDAQ:ULTA) and explained its insights for the company. Founded in 1990, Ulta Beauty, Inc. (NASDAQ:ULTA) is a Bolingbrook, Illinois-based beauty salon company with a $19.3 billion market capitalization. Ulta Beauty, Inc. (NASDAQ:ULTA) delivered a -9.70% return since the beginning of the year, while its 12-month returns are up by 5.89%. The stock closed at $372.35 per share on August 04, 2022.

Here is what ClearBridge Large Cap Growth ESG Strategy has to say about Ulta Beauty, Inc. (NASDAQ:ULTA) in its Q2 2022 investor letter:

“After seeding the portfolio with select growth companies in the second half of 2020 and 2021, we have redirected our focus over the last several quarters to risk management. Moves during the second quarter in pursuit of greater stability included reducing consumer discretionary exposure with the sale of omnichannel cosmetics retailer Ulta Beauty (NASDAQ:ULTA).

We exited Ulta as our thesis has largely played out in terms of a post-COVID 19 earnings recovery. Ulta has steadily gained share over the last several years and its partnership with Target (TGT) represents a new avenue to gain customer loyalty. That being said, we are wary about the resilience of the consumer and the impact of labor cost inflation, which could crimp Ulta’s margin expansion in coming quarters. As with recent activity, the sale further reduces our consumer discretionary exposure and helps manage portfolio risk through an ongoing period of volatility.”

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Our calculations show that Ulta Beauty, Inc. (NASDAQ:ULTA) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Ulta Beauty, Inc. (NASDAQ:ULTA) was in 48 hedge fund portfolios at the end of the second quarter of 2022, compared to 37 funds in the previous quarter. Ulta Beauty, Inc. (NASDAQ:ULTA) delivered a -6.12% return in the past 3 months.

In April 2022, we also shared another hedge fund’s views on Ulta Beauty, Inc. (NASDAQ:ULTA) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.