Ulta Beauty: Negative Sentiment Is Your Friend (NASDAQ:ULTA)

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I’ve been a fan of all-things-beauty retailer Ulta Beauty (ULTA) for a long time. That doesn’t mean I’ve always been a fan of the stock, however, as the past several years have produced some truly eye-popping valuations when Ulta is hot. However, this year, the stock has been out of favor, and while it has rallied well off the March lows, it hasn’t yet made a serious run at its former highs.

In fact, we can see in the two bottom panels that Ulta is part of the specialty retailers, a group which has pummeled the broader market this year. That group is nearly 30% higher than the S&P 500 in 2020, but Ulta is 37% worse than its peer group in the past year. That sort of underperformance is normally something I run from, because I want to own the best stocks in the best groups. Ulta

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