e.l.f. Beauty is a long-term buy due to brand strength, successful category expansion, and margin growth from young brands, with a base case target of $250-$300 by 2030.

Elf on the Shelf down 4% plus.

First one up here is I want to talk about Elf on a Shelf. I thought that was an important stock to talk about. It's had It's had an insane run, right? Stock was $49 about 3 months ago, right?

Uh it runs to 100 plus. Now it's sitting at 95. Let's talk about Elf on the Shelf and where that stock's going from here, okay?

And the third subject we'll get into is a stock of mine that's making a huge move and what am I going to do with this position? Am I going to sell it now? Am I going to buy more? Am I going to hold? All those sorts of things.

Elf has been an extraordinary stock for us. This is a position I have in the public account. It's a $153,000 position. Of that $153,000, $104,000 is gains alone, right?

I have every batch of shares I bought in that portfolio are up. I have these shares I bought back in 2019 at 728. Those ones are up 1,215%. I have this batch I bought back in June of this year for 4909.

Those ones are up 95%. And then I got shares I bought back in July, mid-July, at 7458 and those ones are up $10,000, up 28% there, okay?

Now, the biggest I don't know if I've ever shown this publicly, but I my biggest position I actually have for Elf in a private portfolio. In that particular position is $344,000.

So, it's over double the size of the public account position. In this one so far I'm up $135,000 on it and my average price on this particular portfolio is $58.07.

So, the moral of the story is Elf is a heck of a stock. A heck of a stock, okay? It is an absolute beast. Now, you got to understand what makes Elf really special and you got to understand how much upside is really ahead for this stock, okay?

Listen, what I'm showing you right now is a Target store. Now, I went to this Target store this morning. I I hadn't been to Target in a bit and I wanted to get a few things from Target here today.

So, I was just walking through the store. I wasn't even planning on looking at Elf products, uh but I came across this display while I was walking through the Target store and it just, you know, it just really goes to show you how much power Elf really has that they can put a display like this in the middle of an aisle, right?

And you have a situation here where Target is more than happy to have Elf have that display in there, right? To launch a new products. These are new hair care products that Elf just launched.

Elf has never been in hair care, but they launched a bunch of health hair care products recently like uh shampoo, conditioner, gel, a few other products. And um you know, they're priced very attractively as Elf does, $9 price point, right?

And um you know, that's the power of Elf because if you're Target, if you're Walmart, if you're any big retailer, if you allocate some sort of space to Elf, I don't care if it's shelf space, I don't care if it's something in the middle of an aisle for a display, you know they're going to move the product.

And that matters so significantly and I understand not everybody's from the retail world, but in the retail world, the most important thing, the most important thing is you move product.

If the product doesn't move, we can't have that on the shelf, we can't have that in the aisle. Like, no. And so, somebody like a Target is more than happy to be a launch partner for Elf getting in this new space, right?

And so, Elf launches on their own website, which I bought it through I think like TikTok Shop or something the products. Um and then they also launched in store with Target, right?

And Target's like, "Please, please launch this new product with us." cuz they know it's going to move and they know it's going to bring excitement um to their Target stores as well.

And so, don't underestimate the power of the Elf brand and being in retailers being able to understand, we give them more space, they're going to be productive. They're going to move product.

And they do it, man. They do it. And so, you can always count on them to move their product and it's uh pretty amazing. It goes to show you the brand strength this company has that they could launch in a brand new category like like literally, how many other companies, let me ask you this.

How many other companies in the cosmetics or beauty space could say, "You know what? We've never been in hair care. Let's just launch a hair care products. Let's start selling shampoo and conditioner and gel and these sorts of things."

And how many could do that? And how many could actually be successful at it where it just like sells like insane? Like like there are very few brands that are that strong that they could be like, "We're going to launch shampoo and conditioner.

We've never done that before, but >> [snorts] >> let's do it." And they just they just sell like crazy, right? And you look at the the displays and they're just like sold out. That That, ladies and gentlemen, is a company that is a one of one, okay?

But the here's what you got to understand about Elf as an investment. Listen, this is not just about the Elf show. This is not just about the Elf brand and the opportunity to expand into more products, in more stores, in more shelf space in the United States and international.

It's also the fact that they've got the hottest brand in beauty and that's Rhode. This brand is like blue hot. It's insane. This brand every retailer wants to get Rhode products into their stores.

You may say, "Why doesn't Rhode just expand into every retailer right now?" What makes this brand very special is it's very exclusive. You can't get it everywhere. You can't get it at Walmart.

You can't get it at Target. Like that's what makes this brand very, you know, special. Like a lot of people go directly to their site. Their customer base goes directly to the site to actually buy it.

Or maybe they go through Sephora, but they're in a very limited amount of stores. And believe me, they could get into anywhere they want to get into. Like you just get Rhode in your store, you're like the coolest store out there, man.

And so, this brand has an incredible long-term opportunity in front of it. And it's, like I said, it's the hottest brand in beauty.

And then additionally, they own Naturium, which has been building out their business in a substantial way in the body wash space. And uh this brand just gets bigger and bigger and bigger.

And this brand is wants to be everywhere. So, it doesn't matter if you you're in an Ulta store to buy it, Walmart, Target, they want to be everywhere with this particular brand.

And uh they're doing a phenomenal job to continue to build that brand as well.

And so, you got to understand with those three core brands, it creates a dynamic where this company has growth levers all over all over, right? They've got an incredible opportunity to increase their revenue through going up on price every once in a while on certain products uh across the company, right?

They have an incredible opportunity to accelerate velocity with their marketing campaigns that they do. And this company understands marketing as well as anybody um on all three of their major brands, right?

And they have an opportunity to launch and accelerate velocities in new spaces that they never even existed in, right? And keep in mind, all their brands are actually relatively new to scaling out.

Like Rhode it was like nonexistent a few years ago, right? Elf, I mean, Elf has fundamentally changed their numbers that they're putting up for that company over the past 5 years, right?

Naturium, no one even heard of that brand 5 7 years ago. And brands are young, so long-term they're going to be able to increase margins in a massive way on these brands. And that's something that goes overlooked.

People just think about the growth, which we were talking about, but people don't understand like the margin opportunity ahead for this company and what that will do to the profitability of the overall company as the years go on.

Like, the elf you're seeing in front of you today in terms of earnings per share and net income is literally a complete joke compared to where this company will be 2 years from now, 4 years from now, 6 years from now.

Uh it's going to be a night and day difference in regards to this company, right?

Now, you want to know the big, big opportunity for elf, okay? Here it is. When you look at the biggest beauty companies in the world, right? You're going to see the biggest of the biggest L'Oreal, right?

L'Oreal $232 billion market cap. But it's very customary these companies to can run into the multiple tens of billions of dollars, right? You think about elf and all their success and their brand relevance and the multiple brands they own.

And as of right now, it's still $5 billion market cap, right? The company I just laid out to you, they have the ability to long-term be a company that is tens of billions of dollars of market cap.

Do I think they can take out L'Oreal? I hope. That would be amazing if they could someday and become a multi hundred billion dollar market cap, but I'm not going to hold my breath on that.

So, that's like a you know, if they're going to become that, it's probably going to take them 15-20 years to to get there. And that's a question if they can even get there, right?

But I fully, fully expect this company to be get to a place where they're doing multiple They're a multiple tens of billions of dollars of market cap type company. And as of today, they're just not even remotely close to that, right?

Now, when it comes to a stock like Elf on a Shelf, you're going to stay focused on the stock long-term, right? It's an incredible stock. And it's got an incredible runway of growth ahead in regards to revenues, in regards to the margins, in regards to the profitability of the company, and in regards to the stock price.

And so, short term, the stock's going to be what the stock's going to be, right? Like, people were selling the stock left and right a few months ago when it was at 49 bucks a share.

You know, then they were buying it up and it was 100 plus just what, a week or two ago, right? Now it's 95. Like, it's all over the place. But at the end of the day, look at the long-term opportunity, look at the long-term returns of the stock, and look where the revenues trended over time, and think about where the margins and profitability will trend over the coming years.

And and the other thing you got to keep in mind here is those brands are so successful and they got such an great opportunity to expand those brands, but listen, do you think those are the last brands Elf's ever going to buy?

Of course not. Cuz guess what? They're going to make stupid money from Elf and from Rhode, and from Natrium over the coming years, and that cash balance is going to build exponentially over the coming years, and they're going to be sitting on a massive cash pile that they're going to either do probably massive share buybacks, or buy out other brands, right?

Or maybe they do both. And so, just understand as a company gets more profitable, more of a money maker, like, they're going to be able to do some amazing things with all those profits.

And so, um and that gives them another huge opportunity to continue to build revenues, and that's how you become a giant in uh cosmetics industry. You got to have multiple massive brands, multiple billion-dollar, multi-billion-dollar brands, right?

Now, just in the private group here today, or actually yesterday, there was great conversation regarding Elf, right? And um you know, this is something that always transpires in the private group, like, great conversations kind of back and forth, people sharing their projections for these companies, news, things like that that are going on to keep everybody in the loop, right?

And John inside the private group, he was sharing his revenue projections for Elf uh over the next few fiscal years. Now, these are his revenue projections. I think something's interesting here, okay?

Look. For his base case, he has the core elf USA business as far as revenue growth goes of only 4%. Now, I think that's a really really insanely conservative number for a base case.

When you think about elf and the more points of distribution over the coming years, likely they'll be able to get price raises here and there over the next few years on different products, right?

When you think about sell-through, when you think about expanding the business into new products like they just did with hair care here, I think there's incredible opportunity for even under a base case assumption that the USA business grows much quicker than a 4% number, right?

And so, that's just something to keep in mind. So, under his projections here, he has revenue going to just under 3.5 billion dollars in fiscal year 2030 and about 4.7 billion dollars of total revenue in fiscal year 2030 under a bull case assumption here, right?

But, what about my projections? Well, let me show you my projections here. Now, keep in mind my projections I also shared inside the Private Stock Group's Discord chat today, okay?

Here are my projections for elf. I have elf under my base case doing actually a little under John's projections for his fiscal year. Um of he had almost 3.5 billion. Under my base case, actually only I'm getting to 3.3 come 2030, right?

15% revenue growth on average company. Net income growth, I had that growing pretty exponentially over the coming years. They should get a huge margin lift and that profitability should explode for the company over the next few years.

So, I have them doing 3.3 billion dollars in 2030 for revenue. >> [snorts] >> I have them doing just under a half a billion dollars of net income for this company and it gives them a net income margin of about 15%.

Net income margin of 15% come 2030 is very doable for this company. If you've got those sorts of growth rates, 30 to 35 PE is very fair for this company. This company is going to give me a compound annual growth rate of about 30% a year over the next several years.

So, under my base case assumptions here, which keep in mind that could always not come true, but under my base case assumptions, I'm going to destroy the S&P 500 over the next several years just with Elf stock alone, right?

And so, I have the stock owned about $250 to just under $300 under my base case here, right? Here are my projections for elf.

But look at my bull case. My bull case has in 2030 them doing just under $4 billion of revenue. I have them doing net income of about $647 million. I have them at about 17% net income margins under this bull case assumption. 35 to 40 PE would be very fair for a company growing with these sorts of growth rates in this sort of category.

And we're talking about a compound annual growth rate that pushes deep into the 40s.