“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a five year period?
Today, let’s look backwards in time to 2019, and take a look at what happened to investors who asked that very question about Ulta Beauty Inc (NASD: ULTA), by taking a look at the investment outcome over a five year holding period.
| Start date: | 12/16/2019 |
|
|||
| End date: | 12/13/2024 | ||||
| Start price/share: | $249.10 | ||||
| End price/share: | $424.11 | ||||
| Starting shares: | 40.14 | ||||
| Ending shares: | 40.14 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 70.26% | ||||
| Average annual return: | 11.24% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $17,028.57 | ||||
The above analysis shows the five year investment result worked out quite well, with an annualized rate of return of 11.24%. This would have turned a $10K investment made 5 years ago into $17,028.57 today (as of 12/13/2024). On a total return basis, that’s a result of 70.26% (something to think about: how might ULTA shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“Games are won by players who focus on the playing field, not by those whose eyes are glued to the scoreboard.” — Warren Buffett
