We recently published a list of 10 Oversold Value Stocks To Buy Right Now. In this article, we are going to take a look at where Ulta Beauty, Inc. (NASDAQ:ULTA) stands against the other oversold value stocks.

After Trump’s victory in the presidential election, US stocks surged to record highs. Much of the stock market’s history reveals that value stocks have outperformed their growthier counterparts but the trend has reversed over the last decade. With mega-sized technology stocks especially those driven by AI dominating, the reverse trend intensified. It is important to consider that the Morningstar US Large Growth Index has returned 258% and the Morningstar US Large Value Index has returned 148% in the last decade, reflecting a significant difference.

Growth stocks looked unstoppable until a week in July when the Morningstar growth index fell 3.97% while the value index climbed 3.39%. This was when the investors were confident about the interest rate cuts that were to be executed in the later part of the year. Thus, it looked like they shifted their focus from big tech to more underperforming sectors.

Over the next year, the outlook for value stocks looks bright as concluded by Bankrate’s quarterly Market Mavens Survey. The survey revealed that experts see value-priced equities outperforming over the next four quarters. 42% of respondents preferred value stocks to growth stock over the next year while 33% think returns will be about the same.

When leading investing professionals were asked whether value stocks or growth stocks would offer greater returns over the next year, they put forward different reasons for their preferences. While the view regarding value outperforming growth at the start of a rate-cutting cycle was noticed in the responses, one of the experts inclined towards value stocks by stating:

“If the Fed is cutting rates because the economy is faltering, market participants are apt to seek out the best growth opportunities in a weakening growth environment. However, if economic growth holds up and rates come down, value would be the place to be for the best return prospects.”

Others were of the opinion that falling inflation and interest rates would benefit both classes equally.

Our Methodology

In order to compile a list of the 10 oversold value stocks to buy right now, we first used a stock screener to identify value stocks that have fallen by at least 30% year-to-date and are trading at a forward P/E ratio under 15, as of November 22. We focused on companies trading in industries including consumer staples, financials, legacy healthcare, industrials, and materials. Finally, we ranked the stocks in ascending order of their hedge fund holders, as of Q3 data.

At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Ulta Beauty, Inc. (NASDAQ:ULTA)

Year-to-Date Decline: 30.38%

Forward PE: 14.43

Number of Hedge Fund Holders: 40

Ulta Beauty, Inc. (NASDAQ:ULTA) is one of the largest beauty retailers in the US offering cosmetics, fragrances, skincare products, hair care products, and salon services. The firm has a clear vision of becoming the most loved beauty destination of its guests. As of February 3, 2024, Ulta Beauty operates 1,385 stores across all 50 states

The firm remains competitively differentiated based on three factors, shopping experience, value proposition, and convenience. The shopping experience is top-notch with over 25,000 products from over 600 brands, including the Ulta Beauty Collection, the firm’s private label. To make beauty accessible, the firm offers value through Ulta Beauty Rewards, its industry-leading loyalty program, targeted promotions through its CRM platform, coupons, and in-store events. For convenience, multiple options such as pickup in-store, buying online and picking up curbside, shipping from the store, and shipping to home are available.

In October, Ulta Beauty, Inc. (NASDAQ:ULTA) laid down its strategic priorities to drive market share leadership in beauty and wellness and profitable growth. The firm plans to increase new stores with a target of over 1,800 stores over the long-term, drive loyalty program growth to 50 million members by 2028, improve the immersive in-store experience as well as digital engagement, and lead in wellness with an expanded assortment and enhanced experience.

It is important to note that Ulta Beauty, Inc. (NASDAQ:ULTA) was the original disruptor in beauty bringing ‘All Things Beauty. All In One Place’ over 30 years ago. While the firm has a successful business model and a leadership position in a robust and expanding beauty market, it is poised to grow.

Overall, ULTA ranks 5th on our list of oversold value stocks to buy right now. While we acknowledge the potential of ULTA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than ULTA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article is originally published at Insider Monkey.