Warren Buffett's Berkshire Hathaway Just Sold Shares of 2 Companies. Here's Why I (Humbly) Disagree and Expect Both Stocks to Go Up From Here.

Core Viewpoint - Berkshire Hathaway's recent decision to sell shares of Ulta Beauty and Floor & Decor is viewed as a mistake, as both companies are expected to outperform the S&P 500 over the next five years [3][4][15] Ulta Beauty - Ulta Beauty operates over 1,400 locations, indicating limited future growth opportunities, with management guiding for a slight pullback in net sales and modest same-store sales declines in 2024 [5] - The company is highly profitable, expecting an operating margin of approximately 13% for the year and maintaining it above 12% long-term [6] - Ulta Beauty has authorized a $3 billion share buyback plan, which is expected to drive double-digit earnings per share (EPS) growth, potentially outpacing the S&P 500 [7][8] - The stock is currently trading at its third lowest price-to-earnings (P/E) ratio, which reduces downside risk as profits are anticipated to rise [8][9] Floor & Decor - Floor & Decor's stock has decreased by 30% from its all-time high, with same-store sales projected to decline by about 8% year-over-year in 2024 due to a contracting home-improvement market [10] - Concerns about the company's performance are considered premature, as the housing market is cyclical and expected to recover, which would benefit Floor & Decor [11][14] - The company has significant expansion potential, targeting 500 locations in the long term, with plans to open 30 new stores in 2024 [12] - Despite a profit margin of only 4.7% in 2024, management is focused on maintaining profitability through cost-cutting measures, positioning the company well for future recovery [13][14]