In late 2010 Ulta Cosmetics (ULTA) came on my radar as a stock to own. Investors Business Daily had it in the IBD 100, which is now the IBD 50, and a number of investing publications were raving about the strong earnings of this stock. I put it up to the Google Trends test and this is what I found:
Notice the huge jump in search traffic at the end of 2010 and the beginning of 2011. Today, I would like to see five straight years of year over year traffic increases but remember there was a recession back in 2009 causing most consumer discretionary companies to see lower search traffic during 2009 and 2010.
With a Google Trend chart like this, it was obvious the Ulta stock had room to run. If the overall market was strong, Ulta was going to be one of the leaders.
The purchase price for Ulta was $34 a share and in the spring of 2016 Ulta hit $210 a share. This has been one of the strongest retail stocks in the market and it was easily predicted by simply using Google Trends to compare month over month and year over year search trends.
Below you will find the year over year traffic growth for Ulta for the last five years:
Not only is the traffic at an all time high, it is actually increasing faster than ever before. In March 2016 we saw a 34.6% increase in searches compared to March of 2015. If more people are searching, more people are buying.
Even if you didn’t get into Ulta at $34 a share, there is still room to grow. If you are buying at $210 today you may see a pull back to the 50 or 200 day moving average but this is a company that is going to make tons of money.
If you want to invest in the social media trend this is a great play. With more and more young women hoping to look like Kim Kardashian or Kylie Jenner, Ulta is their cosmetic store of choice. While Walgreens and CVS sell a ton of makeup, Ulta is the best pure makeup play.
For those interested, here is what the current Ulta Google Trends chart looks like:
If you would like more information on stocks to invest in reach out to me at firstname.lastname@example.org. I have a number of strong plays that should increase in value over the next six to 12 months.