Celebrities and Trillions: Gomez and Buffett Share the Same Industry

The world of celebrities often seems like a glittering parallel universe. Yet stars share common interests with us, including investments. For example, former Disney actress Selena Gomez and investment legend Warren Buffett have found a shared industry for their investments. Selena Gomez, known for her fame among Millennials and Gen Z, is the founder of the cosmetic brand Rare Beauty. Despite mixed reviews, the company's annual revenue is estimated to be between $350 and $400 million. Her 7.6 million followers on Instagram lend her business additional shine and credibility. Simultaneously, Buffett's investment company Berkshire Hathaway established a position worth approximately a quarter of a billion dollars in the cosmetics retailer Ulta Beauty in the past quarter. At first glance, this investment might seem unusual. However, Berkshire owns numerous business shares loosely connected with the cosmetics and fashion industry, such as the jewelry brands Ben Bridge and Borsheims, and shoe companies like Brooks and H.H. Brown. Ulta Beauty, therefore, fits into the existing portfolio of retail investments. Ulta Beauty operates nearly 1,400 stores, offers 25,000 products from 600 brands, and serves a broad customer base. The company further strengthens its brand through a partnership with Target, unlocking additional customer potential. However, key figures like same-store sales have shown a decline for several years, reflecting increasing competition and a weak macroeconomy. Nevertheless, despite fluctuating sales, Ulta has reported growth in cash flow. A comparison of Ulta's price-earnings ratio with direct competitors like e.l.f. Beauty, Estée Lauder, and L'Oréal shows that Ulta is the lowest-valued. This underappreciated position, combined with strong cash flows and ongoing share buybacks, suggests Buffett and management see a favorable opportunity. Confidence in consumer resilience could soon lead to improved sales figures. With strong brand presence, growing cash flows, and attractive valuation, an investment in Ulta Beauty appears worthwhile. However, before buying Ulta Beauty shares, consider this: The analyst team at Motley Fool recently identified 10 stocks deemed particularly promising – Ulta Beauty is not among them. Their recommendations could potentially yield significant returns, as was the case with Nvidia since 2005. The stock advisory system Stock Advisor offers extensive support, regular updates, and two new stock suggestions monthly. Selena Gomez and Warren Buffett both demonstrate that the connection between celebrities and the financial world can indeed open up exciting investment opportunities.