Warren Buffett recently invested in a well-known pizza company operating in the UK

Every quarter, I check the ’13F’ regulatory filing. This shows the stocks that big-name investors in the US have been buying and selling (in the past quarter). Over the weekend, I scanned Warren Buffett’s portfolio to see what the investment portfolio has been selling for recently. Here’s a look at one stock he took out and another he bought for his investment vehicle, Berkshire Hathawayof ,q3.

Check in and out quickly

Buffett’s stock sold was Divine Beauty (NASDAQ: ULTA). It is an American cosmetics and skin care chain that sells products from a wide range of brands. Documents show he sold 665,903 shares, equivalent to 96.5% of his holdings.

This is an unusual move for Buffett. The reason I say this is that you shopped at Ulta a few months ago. And in the past, he has emphasized the importance of long-term investing and said his favorite term to hold is ‘forever’. So I’m not sure what happened here.

Perhaps her team sees the dangers surrounding the rising levels of competition in the beauty space? This may slow down the company’s growth in the coming years.

Personally, I think this stock still looks very attractive. First, it sells products that are in high demand in today’s social media-centric world. According to Grand View Research, the global cosmetics market will grow by more than 6% per year between now and 2030.

Second, it is very profitable. In the last financial year (ended 31 January 2024), the return on principal was over 40%. Third, the measurement seems very reasonable. Currently, the forward price-to-earnings (P/E) ratio is only 16.

Given these advantages, I did not decide to invest in this company.

Taking a piece of Domino

Looking at his recent purchases, one stands out to me Domino’s Pizza (NYSE: DPZ), a well-known restaurant chain that uses a franchising model. In Q3, Buffett bought 1.27m shares. That equates to a stock worth $550m at today’s share price.

This is an interesting move, in my opinion. There is certainly a lot to like about Domino from an investment perspective. Not only is it very profitable (return on investment last year was 73%) due to its large product but it also has a long history when it comes to generating wealth for investors.

However, the stock is very expensive. Currently, the P/E ratio here is around 26. That multiplication of benefits doesn’t leave much room for error. If earnings miss estimates, the stock could plummet.

I wonder if Buffett would have been better off grabbing a piece of the UK-listed version Domino’s Pizza (LSE: DOM)? It holds the master franchise agreement to own, operate, and franchise Domino’s stores in the UK and Republic of Ireland, and has been a good investment in the long run.

The stock is slightly cheaper than its US-listed peers. Currently, the P/E ratio is only 16.9, a very attractive valuation.

Of course, the company’s market share is much smaller than that of its US-listed peers. So there is little chance of growth. And the disposable income here in the UK is much lower than in America today. So it may not perform as well as a US-listed stock in the coming years.

However, the measurement gap is significant. So, I think the stock is worth considering today.