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The 1,264-store U.S. company distributes products, operates beauty salons and sells its products online. It posted one of the best profitability figures in the sector for years, with EBITDA up 140% between 2021 and 2022, compared to 2.28% over the same period for L Brands, one of its main competitors. Ulta Beauty aims to be responsible and use non-polluting resources and thus control its emissions. Despite this, its ESG is a B, but it performs better in two other areas of its business: the Business Predictability and the Momentum. Ulta beauty is one of the leaders in the beauty products category. Its flagship product is a concealer, whose sales are higher than other concealers from major groups such as L'Oréal or Sephora.
Ulta's ecosystem aims at creating more efficient, cheaper and better-quality products, thus improving customer experience. To keep its status as a major player in its sector, the company is embarking on ambitious projects thanks to artificial intelligence (You can read my article about how AI will revolutionize our lives). Ulta has signed a partnership with Google to operate a virtual trial tool, and with Adeptmind to develop a new personalized search engine for the company's future stores. At the same time, profits are expected to increase significantly - +23.32% between 2021 and 2022 - increasing investor confidence and consolidating the current strong balance sheet with steadily increasing net cash and margins. The company can also benefit from a P/E that is stable at around 20.0 and an ROE of around 60%. Acquisition projects and investments are increasing with the implementation of a customer-focused supply chain to optimize the physical network, technology improvements and corporate capabilities to support organizational growth. As mentioned earlier, its flagship product and core business is based on skin care. This is especially interesting since this market has been steadily growing since 2011, reaching 41% of the cosmetic industry's sales by 2021, according to Statista. Moreover, net sales up 46% and earnings per share up 100% from 2017 to 2021.
Since its IPO in 2007, the largest beauty retailer in the U.S. has seen its share price rise by 1096%, corresponding to a CAGR of 17.98% and representing the largest increase in its sector. This rise allows the company to see its current share price at $383.27, more expensive than its competitors, but its growth opportunity is much better. The company is taking advantage of its current leadership position to expand its business and gain more market share. Ongoing projects related to artificial intelligence will allow the company to boost profits and margins while lowering costs. At the same time, increased use of new technologies will allow the company to more easily detect customer preferences and will be able to make more new products available. With the opening of 44 new stores in 2021, the company aims to open twice as many by 2023, enabling it to significantly increase its business.
Since the start of the covid-19 pandemic, repeated lockdowns have taken a toll on the automotive industry. Production lines have come to a halt and supply cannot keep up with demand, which is booming. Delivery times are longer, increasing the price of new vehicles by 8.78% between 2021 and 2021 in the United States. But this situation benefits Lithia Motor, which offers its customers used vehicles at lower prices with better availability. It has been able to establish itself since its IPO and has significant growth potential with forecasts of 86% growth by 2024, according to Standard & Poor's. The company is among the most attractive in the market in terms of valuation, with an estimated enterprise value of 0.46 times its revenue. At the same time, the company's net cash increased by 344% between 2020 and 2021 then correlated to its EBITDA, up 320% over the period 2017-2021. Lithia Motor has a significant competitive advantage in operating on three distinct axes: domestic, import and luxury. This diversification allows the company to attract more customers and consequently, increase the number of vehicles sold. Moreover, Lithia's consensus is positive, the company communicates a lot: on its results, its projects, its margins... allowing investors an important visibility on the activity of the group.
Lithia Motor develops its network with strategic collaborations with Honda or Pfaff Motosports. It became the first American car dealership group to take root in Canada. Lithia Motor takes advantage of its leadership position to develop its network of sales outlets and to expand internationally. This decision is supported by an increase in earnings per share as well as a revised forecast. The company also hopes to see its share price double by 2025, after it rose 2375% since its IPO. At the same time, Lithia Motor offers investors better financial reports than its main competitors like China Meidong Auto and Group 1 Automotive. Its share price is higher, but the growth prospects are much better.
The global automotive semiconductor market was valued at $37 billion in 2020 and is expected to reach $101 billion by 2026, representing a market CAGR of 17.3%. The automotive sector is facing various challenges, such as improved electric charging infrastructure and consumer expectations for further technological improvements to reduce vehicle prices and provide better range. As a result, competition can be expected to be fiercer and margins less generous on the automotive side compared to the semiconductor manufacturers. In a growth sector, it is therefore interesting to study On Semiconductor, which has turned to the buoyant market of electric and autonomous vehicles - after some diversification -, making a place for itself in front of the big players in the sector: STMicroelectronics, NPX Semiconductors or Infineon Technologies. On Semiconductor is becoming one of the leaders in electrification by being a preferred supplier to GM, Ford, VW, Daimler, Stellantis, Toyota and Honda, since the automotive market represents 33% of its turnover. The company is well positioned in the market for silicon carbide - the basic material used in semiconductors. With a net cash position that more than doubled between 2021 and 2021, On Semiconductor acquired GT Advanced technologies, enabling it to further vertically integrate its supply chain in the face of global shortage uncertainty. Today, the group aims to focus on profit growth rather than revenue growth and see a 30-fold increase in the number of components per vehicle. On Semiconductor announced a new AutoX Gen5 autonomous driving platform for its LiDAR and image sensing technologies. This Gen5 autonomous technology, using 28 2D image sensors and four 3D LiDAR sensors, enables fully driverless RoboTaxis for freight and passenger transportation. Moreover, the company recently announced the launch of its new silicon carbide MOSFET module designed for electric vehicles. It provides reduced thermal resistance to lower the temperature of the chip during operation. At the same time, earnings per share are up as is its EBITDA, allowing it to look forward to good prospects and gaining more market share.
As you know, the covid pandemic has been extremely problematic for the automotive industry, resulting in a global shortage of semiconductors. But this has allowed companies like ON Semiconductor to grow and become one of the major partners of US manufacturers, allowing it to grow 248% over the last five years. However, the company is not as influential as its competitors such as: Taiwan Semiconductor, Nvidia, Broadcom, Intel, Qualcomm which enjoys a much larger market share but has suffered a larger loss since January 1. This 22% drop has caused the company's market capitalization to fall to $22,855 billion, which is 18 times less than Nvidia's. There is no doubt that the company is undervalued at the moment and should enjoy a significant rebound in 2023.
