Target and Ulta will be ending their in-store partnership, concluding a popular offering that has drawn shoppers interested in trendy beauty products to the big-box retailer https://t.co/zgZJM0Cn7K ...

Core Viewpoint - Bridgewater Associates, one of the largest hedge funds globally, significantly increased its investments in major U.S. tech companies during the second quarter of this year, particularly in Nvidia, which is now its third-largest holding [1][3]. Summary by Sections Investment Increases - Bridgewater raised its stake in Nvidia by nearly 4.39 million shares, bringing its total to 7.23 million shares, a 154% increase from the previous quarter, making up 4.61% of its total portfolio [3][7]. - Microsoft saw a 111.9% increase in shares, with an additional 905,620 shares added, totaling 1.72 million shares, now representing 3.44% of the portfolio [3][7]. - Alphabet was increased by approximately 2.56 million shares, totaling 5.60 million shares, an 84.1% rise, now accounting for 3.98% of the portfolio [3][7]. - Meta's shares increased by over 38,146 shares to 807,073 shares, marking an 89.6% increase, now 2.40% of the portfolio [4][7]. - Uber's shares surged by 314,000, a 531% increase, now making up 1.41% of the portfolio [5][7]. - Johnson & Johnson's shares increased by over 199,000, a 667.8% rise, now 1.41% of the portfolio [6][7]. Investment Reductions - Bridgewater reduced its Amazon holdings by approximately 795,500 shares, a 6% decrease, now 1.10% of the portfolio [8][9]. - AMD shares were reduced by about 408,860 shares, a decrease of 18.89% [11]. - PayPal saw a reduction of nearly 447,790 shares, a drop of over 12% [10]. - The fund completely exited its positions in Alibaba, Baidu, and JD.com, which were previously increased in the first quarter [12][13]. New Investments - Bridgewater initiated a position in Arm with nearly 474,000 shares, representing 0.31% of the total portfolio [14]. - New positions were also taken in Intuit, EQT, Lyft, and Ulta Beauty, with each holding a small percentage of the overall portfolio [14]. Major Holdings - The SPDR S&P 500 ETF remains Bridgewater's largest holding, despite a reduction of 731,882 shares, now accounting for 6.51% of the portfolio [15][18]. - The iShares Core S&P 500 ETF increased by nearly 6.2% to approximately 2.31 million shares, now 5.78% of the portfolio [17][18]. - The second to tenth largest holdings include Nvidia, Alphabet, Microsoft, Meta, Salesforce, Booking Holdings, and GE Vernova, with various changes in share counts and percentages [17][18].

Core Insights - Bridgewater Associates made significant adjustments to its investment portfolio in Q2, particularly increasing its holdings in major technology companies [1][2][3][6] Technology Sector - Nvidia was a key focus for Bridgewater, with an increase of nearly 4.39 million shares, bringing total holdings to 7.23 million shares, a growth of over 154% from Q1, making it the third-largest holding [1] - Microsoft also saw a substantial increase, with an addition of 905,600 shares to reach 1.72 million shares, a rise of approximately 111.9%, elevating its position to the sixth-largest holding [2] - Alphabet and Meta were also among the increased holdings, with Alphabet's shares rising by 2.56 million to 5.6 million shares (an 84.1% increase) and Meta's shares increasing by 381,000 to 807,000 shares (an increase of 89.6%) [2] Other Notable Holdings - Uber and Johnson & Johnson received significant increases, with Uber's shares rising by 3.14 million (531% increase) and Johnson & Johnson's shares increasing by over 1.99 million (667.8% increase) [3] - In contrast, Amazon and AMD saw reductions in holdings, with Amazon's shares decreasing by approximately 795,500 (6% decrease) and AMD's shares down by 408,900 (18.9% decrease) [3] Chinese Stocks - Bridgewater completely exited its positions in Chinese stocks, including Alibaba and Baidu, which had previously seen significant increases in Q1 [4] - This move has raised concerns about the future performance of Chinese stocks in the market [4] New Positions - The firm initiated new positions in several companies, including Arm (474,000 shares), Intuit (59,000 shares), EQT (787,000 shares), Lyft (247,900 shares), and Ulta Beauty (58,000 shares), although these positions represent a small percentage of the total portfolio [4] Core Holdings - The SPDR S&P 500 ETF (SPY) remains Bridgewater's largest holding, despite a reduction of 732,000 shares (21.9% decrease) [5] - The SPDR Gold ETF (GLD) maintained its position with approximately 1.11 million shares, while other significant holdings like iShares Core S&P 500 ETF (IVV) and Salesforce saw increases [5] Market Outlook - The adjustments in Bridgewater's portfolio reflect its optimistic outlook on the technology sector while indicating caution regarding Chinese stocks, influenced by geopolitical and market valuation factors [6]

Group 1 - Bridgewater Associates significantly increased its holdings in Nvidia by over 154%, making it the fund's third-largest position [2] - Microsoft saw a holding increase of over 111%, while Google and Meta increased their stakes by over 84% and nearly 90%, respectively, ranking as the sixth, fifth, and seventh largest positions in the fund [2] - Uber's holdings surged by more than five times, and Johnson & Johnson's stake increased by over 667% [2] Group 2 - Bridgewater reduced its positions in Amazon by nearly 6%, AMD by nearly 19%, and PayPal by over 12% [2] - The fund completely exited its positions in Alibaba, Baidu, and JD.com [2] - New positions include chip design company Arm, as well as Intuit, EQT, Lyft, and Ulta Beauty [2] Group 3 - The SPDR S&P 500 ETF (SPY) remains Bridgewater's largest holding, although the stake was reduced by approximately 21.9% [2] - The SPDR Gold ETF (GLD) holdings remained unchanged in the second quarter [2]

Group 1 - Bridgewater Associates, one of the largest hedge funds globally, significantly increased its holdings in major U.S. tech companies during Q2 of this year, particularly in Nvidia [1] - The fund raised its stake in Nvidia by nearly 4.39 million shares, bringing its total holdings to 7.23 million shares, a growth of over 154% compared to the end of Q1 [1] - Bridgewater also added to its positions in other tech giants, including Alphabet, Microsoft, and Meta, while completely exiting positions in Alibaba and Chevron [1] Group 2 - In Q2, Bridgewater initiated a new position in chip design company Arm with approximately 474,000 shares, representing 0.31% of its total holdings [1] - The fund also entered new positions in Intuit (approximately 59,000 shares), EQT (787,000 shares), Lyft (approximately 247,900 shares), and Ulta Beauty (over 58,000 shares), with respective holdings of 0.19%, 0.19%, 0.16%, and 0.11% [1]

Group 1: Stock Performance - Ulta Beauty's stock increased by 1.4% to $514.84, lagging behind the S&P 500's daily gain of 1.47% [1] - Over the past month, Ulta Beauty shares gained 6.27%, outperforming the Retail-Wholesale sector's loss of 1.38% and the S&P 500's gain of 0.64% [1] Group 2: Financial Projections - The upcoming earnings per share (EPS) for Ulta Beauty is projected at $4.92, reflecting a 7.17% decrease from the same quarter last year [2] - Revenue is expected to be $2.6 billion, showing a 1.7% increase compared to the year-ago quarter [2] - For the full year, earnings are projected at $23.48 per share and revenue at $11.64 billion, indicating changes of -7.34% and +3.04% respectively from the previous year [3] Group 3: Analyst Estimates and Rankings - Recent changes in analyst estimates suggest a favorable outlook on Ulta Beauty's business health and profitability [3] - The Zacks Rank system, which evaluates stocks based on estimate changes, currently ranks Ulta Beauty at 3 (Hold) [5] - The consensus EPS projection has increased by 0.15% in the past 30 days [5] Group 4: Valuation Metrics - Ulta Beauty has a Forward P/E ratio of 21.63, which is a premium compared to the industry average Forward P/E of 14.38 [6] - The company has a PEG ratio of 3.07, compared to the Retail - Miscellaneous industry's average PEG ratio of 2.95 [7] Group 5: Industry Context - The Retail - Miscellaneous industry, part of the Retail-Wholesale sector, has a Zacks Industry Rank of 163, placing it in the bottom 35% of over 250 industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

Core Insights - The article discusses the investment landscape, focusing on long-term wealth creation through companies with strong profitability and attractive valuations [1][2] Altria Group - Altria Group is highlighted as a potentially undervalued stock despite a 20% rally over the past 12 months, with a current price of $59.59 and a 12-month forecast of $56.75, indicating a downside of 4.76% [4] - The company offers a dividend payout of $4.08 per share, resulting in an annualized yield of 6.9%, which is higher than U.S. inflation rates and Treasury bond yields [5] - Altria generates a return on invested capital (ROIC) of 42.8%, which supports its stock price performance and potential for capital compounding [6] - There has been an 8.1% decline in short interest over the past month, suggesting bearish capitulation among short sellers [7] Mastercard - Mastercard is presented as a strong investment opportunity with a current price of $568.18 and a 12-month price forecast of $612.90, indicating a potential upside of 7.87% [10] - The company boasts a ROIC of 56.6%, contributing to its stability and resilience during market volatility [11] - Analyst Timothy Chiodo from UBS Group has reiterated a Buy rating for Mastercard, setting a valuation target of $670 per share, implying a potential rally of 21% [12] Ulta Beauty - Ulta Beauty is characterized as a resilient business within the consumer discretionary sector, with a current price of $514.95 and a 12-month forecast of $465.04, indicating a downside of 9.69% [14] - The company achieves a ROIC of 26.8% and has seen a 32% rally over the past quarter, leading to a significant reduction in short interest [15] - Analyst Michael Baker from DA Davidson has expressed a bullish outlook for Ulta, with a Buy rating and a valuation target of $550 per share, suggesting an additional return of up to 11% [16]

Group 1 - Ulta Beauty's stock has increased by 19.65% year to date, outperforming broader retail benchmarks, while LVMH's stock has decreased by 11.39% YTD due to concerns over weakening demand in China and Europe [2][4] - The shift in consumer spending reflects a trend where shoppers are prioritizing affordable self-care products over luxury items, indicating a "trading down" behavior that does not feel like a downgrade [2][3] - Ulta's diverse product range, loyalty-driven model, and efficient domestic supply chain are not only defensive assets but also serve as growth engines for the company [3][4] Group 2 - LVMH is facing challenges as demand in Asia declines and U.S. consumers show signs of fatigue, impacting even its flagship brand, Louis Vuitton [4] - In contrast, Ulta is successfully meeting consumer desires for affordable indulgence, positioning itself as a leading player in the beauty industry [4][5] - The current market dynamics suggest that Ulta is not just a trend but a significant movement in the retail space, capturing consumer attention and loyalty [4][5]

Industry Overview - The beauty and cosmetics industry has evolved into a multi-billion-dollar global market, driven by innovation, cultural trends, and changing consumer values [2] - Skincare has become a dominant trend, with consumers prioritizing healthy skin over cosmetic coverage, leading to a surge in products featuring natural ingredients and dermatologist-recommended solutions [3][4] - Sustainability is increasingly important, with a focus on ethically sourced ingredients, sustainable packaging, and transparent business practices [5] Company Insights - Johnson & Johnson (JNJ) is making strides in sustainability through initiatives like reducing plastic usage and improving recyclability in its skincare and personal care lines [6] - Unilever PLC (UL) is integrating advanced technologies into its skincare brands, focusing on dermocosmetics that combine pharmaceutical research with skincare [8] - The Estee Lauder Companies Inc. (EL) is undergoing a transformation with its "Beauty Reimagined" initiative, emphasizing digital agility and consumer-centricity [10] - Coty Inc. is redefining its position in the beauty landscape through innovation and digital acceleration, with a strong focus on prestige fragrances [15][16] - Ulta Beauty is enhancing its customer experience through digital innovation and a loyalty ecosystem, with over 45 million active rewards members [20][22] Technological Advancements - Technology is reshaping the beauty industry, with AI-powered diagnostics and augmented reality enhancing the shopping experience [7] - The Estee Lauder Companies is leveraging AI for demand forecasting and product development, partnering with Adobe and Microsoft for further innovation [13][14] - Ulta Beauty is utilizing mobile-first innovations and AI tools for personalized beauty experiences, enhancing its omnichannel strategy [21][22] Market Trends - The rise of K-beauty and J-beauty influences consumer preferences, leading to increased investment in hydration-focused and sun protection products [4] - Coty's online sales now contribute nearly 20% to total revenues, supported by partnerships with platforms like Amazon and TikTok Shop [17] - Ulta Beauty is seeing growth across multiple categories, particularly in fragrance and skincare, while also expanding its wellness offerings [19]

Core Viewpoint - Value stocks are currently overlooked in the market, with a potential rotation back into undervalued stocks expected in the coming months [1] Group 1: Investment Opportunities - Investors can utilize a screening process focusing on high returns on capital and strong business models to identify undervalued stocks [2] - Ulta Beauty, Adobe, and Sprouts Farmers Market are highlighted as stocks with favorable profiles, positioned in low-cyclical spaces and offering asymmetric upside opportunities [3][4] - Ulta Beauty's stock is trading near its 52-week high, yet its forward P/E ratio of 19.7x indicates it remains undervalued compared to historical levels [3][4] Group 2: Company Fundamentals - Ulta Beauty has not been this undervalued since the onset of the COVID-19 pandemic, with strong fundamentals supporting its business [4] - The company enjoys a gross profit margin of 42.7%, which is indicative of its pricing power and profitability [5] - Ulta's return on invested capital (ROIC) stands at 26.8%, aligning with long-term stock price performance expectations [6] Group 3: Analyst Ratings and Price Targets - Analyst Michael Baker from DA Davidson has reiterated a Buy rating on Ulta with a price target of $550, suggesting a 16% upside from current levels [7] - Adobe's forward P/E of 17.1x is the lowest on record, indicating a potential for significant upside as the economic landscape improves [8][10] - Gil Luria from DA Davidson has placed a Buy rating on Adobe with a price target of $500, representing a 34% upside potential [11] Group 4: Sprouts Farmers Market - Sprouts Farmers Market has seen a 100% rally over the past year but still holds potential for further growth due to its defensive business model [13] - The company boasts a 15% ROIC, positioning it favorably among peers and justifying its premium valuation of 30.8x forward P/E [14][15]