“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 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 ten year period?
Today, let’s look backwards in time to 2013, 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 ten year holding period.
| Start date: | 05/22/2013 |
|
|||
| End date: | 05/19/2023 | ||||
| Start price/share: | $94.06 | ||||
| End price/share: | $491.05 | ||||
| Starting shares: | 106.32 | ||||
| Ending shares: | 106.32 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 422.06% | ||||
| Average annual return: | 17.98% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $52,226.05 | ||||
As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 17.98%. This would have turned a $10K investment made 10 years ago into $52,226.05 today (as of 05/19/2023). On a total return basis, that’s a result of 422.06% (something to think about: how might ULTA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Value investing requires a great deal of hard work, unusually strict discipline, and a long-term investment horizon. Few are willing and able to devote sufficient time and effort to become value investors, and only a fraction of those have the proper mind-set to succeed.” — Seth Klarman
