6.6 Sales? Why I’m Buying the 2026 Sell-Off: TSCO, ULTA, and VEEV

Ulta Beauty (ULTA) down 23%…
Veeva Systems (VEEV) down 23%…
Tractor Supply (TSCO)–a whopping 40% in the red!

I’ll be honest…I hadn’t been paying them too much attention over the last few months.

Primarily, these are relatively small positions in my portfolio. Coupled with the adrenaline-driven run by Singapore’s booming semiconductor-related manufacturers, you can’t blame me for ignoring them.

However, alongside the sell-off in Intuitive Surgical (ISRG) and Shopify (SHOP), they have been a persistent drag on my US portfolio’s performance. While the main global indexes hit recurring highs this year, my US portfolio continues to stay below water.

I didn’t intend to make any moves this month.

But seeing the robust results and firm forward guidance from both Ulta and Veeva changed the narrative for me. Tempted by the market’s heavy discounts, I decided to increase my stakes in them—and also Tractor Supply.

Let’s take a quick dive into their latest results and see if the street has fundamentally misjudged their compounding trajectories. Or perhaps I’m the fool again to ignore the markets’ message.

Tractor Supply: A Pit Stop, Not Dropping Out of the Race

When you contrast the robust FY2026 guidance provided by Tractor Supply at the start of the year against its sluggish 1Q2026 results, it is completely clear why the market reacted by punishing the share price.

First-quarter revenue crept up a modest 3.6% YOY to US$3.59 billion, while comparable store sales squeaked out a muted 0.5% gain. The real sting came from the bottom line: diluted EPS declined by 7.2% to US$0.31 over the same period, missing analyst estimates.

Management attributed this soft start to a combination of distinct headwinds:

• Macroeconomic Caution: Persistent consumer spending pressure on high-ticket, discretionary items.
• Unseasonable Weather: A late-winter freeze across northern regions that choked out early-spring volume.
• Companion Animal Headwinds: Continuing underperformance and promotional drag within the core Pet division.

Yet, despite these near-term challenges, leadership firmly reaffirmed their full-year guidance range (targeting 1% to 3% comps and US$2.13 to US$2.23 EPS).

For patient investors, this is the silver lining.

Because the earnings call occurred three weeks into April, management was already sitting on real-time operational data. Reaffirming those full-year targets serves as a strong signal that deferred demand—for bulk feed, live goods, and outdoor seasonal project tools—bounced back rapidly the moment the spring thaw arrived.

Paw Patrol to the Rescue? Fixing Its Pet Margins

To stop the margin slide in its Companion Animal segment, Tractor Supply is shifting away from low-margin commercial pet food and building a high-margin health-and-wellness ecosystem.

• Freshpet Infrastructure Rollout: On the brick-and-mortar floor, they are rapidly capturing premium dietary segments by scaling Freshpet refrigerated layouts from a negligible baseline to a targeted 700 locations by the end of this year.
  
• Omnichannel Digital Rx Integration: Driving high-margin loyalty capture by embedding their newly integrated Allivet veterinary prescription platform directly into the 38-million-member Neighbor’s Club ecosystem.
  
• The VIP Petcare Acquisition: This latest acquisition last month is the game changer. By buying the nation’s largest mobile vet network (2,700 locations), Tractor Supply now has the ultimate customer acquisition tool.
  
  When a vet at a mobile clinic writes a prescription, it is instantly funnelled into the Allivet digital app, locking the customer into a high-margin, automatic re-order pipeline. While they are at the store for the vet visit, they shop the aisles and pick up premium food.

The full financial boost will take a few quarters to scale, but it sets up a powerful compounding growth story for the years ahead.

Forward Valuation: A Mispriced Opportunity

At the current price of US$29 to US$30, Tractor Supply is trading at a forward P/E of roughly 13x to 14x its reaffirmed FY2026 earnings midpoint.

To me, that’s a great offer for a dominant retail compounder holding an unmatched moat in the rural lifestyle market.

If Tractor Supply proves that its delayed spring volume is flowing efficiently through the cash registers in the upcoming quarters, expect this business to zoom right out of the pit stop and back into its long-term growth lane.

Ulta Beauty: An Ultra-Beautifully Executed Quarter

While Tractor Supply is currently navigating a complex structural pivot to fix its pet margins, Ulta has delivered an incredibly clean, beautiful 1Q2026.

Comparable store sales marched up 5.3%, driving a powerhouse EPS print of US$7.74 (+15.5% YoY). Gross margins expanded by 100 basis points to 40.1%, proving that internal operational efficiencies are executing flawlessly.

Interestingly, leadership left their full-year net and comparable sales growth guidance completely untouched, opting to only nudging up their full-year EPS target to $28.36–$28.80.

The reason for this highly conservative posture despite a robust start is clear: management is baking in a margin of safety for uncertain macro conditions and preparing to lap exceptionally tough YOY comparisons in 2Q and 3Q, where they absolutely crushed expectations last year.

For long-term investors, this sandbagged guidance is excellent news. It establishes a very low floor.

If Ulta simply matches or slightly beats these heavy 2025 multi-stack hurdles over the next two quarters, the market is highly likely to re-rate the stock upward.

Ignoring minor quarter-to-quarter variations, Ulta’s various strategic initiatives, including high-margin Space NK international acquisition and their new TikTok Shop integration, are showing positive signs for both the near-term and future growth.

Forward Valuation: Reasonably Priced Again

The market was admittedly over-optimistic about Ulta’s near-term prospects last year, pricing it for absolute perfection. However, the healthy price correction observed this year has brought the valuation back down to earth.

Ulta is now trading at a highly reasonable ~16x forward earnings, representing a PEG ratio of just ~1.2 based on the midpoint of management’s own conservative EPS guidance.

While it isn’t trading at a dirt-cheap distressed multiple, this represents a highly attractive offer for a premium beauty compounder.

Veeva Systems: Defying the AI-Disrupting and Salesforce Bears

Much like Ulta’s recent results, Veeva has delivered a clean beat-and-raise for its first quarter of fiscal 2027.

Despite intense market anxiety over generative AI threats and the potential fallout from losing legacy CRM customers to Salesforce (CRM), the bearish narrative is completely absent from the actual financial statements.

Total revenue for the quarter grew 16% YoY to US$882.9 million, and Non-GAAP fully diluted EPS marched up 13.7% to US$2.24, outperforming Wall Street expectations.

AI Agents: Providing the Industry Lead

“It’s not giving tooling to people to design agents. This is to designing and operating the standard agents for the industry rather than the industry having to hire humans for those specific jobs. So that way, humans can do the more important things and the industry can produce more medicines at the end of the day, and that’s how the industry grows.”
– Peter Gassner, Founder & CEO

AI is not taking away business from Veeva, nor is it cannibalising its own revenue. I like Peter’s thinking on how AI will work within Veeva and the broader life sciences ecosystem.

The new Veeva Falcon platform (targeting agentic labor for clinical, regulatory, and safety operations) and the recent Ostro acquisition (a leader in conversational AI) aim to help the industry seamlessly tap into the power of AI.

Let me hazard a guess—most pharmaceutical giants would vastly prefer a reputable, deeply embedded partner like Veeva to manage their AI infrastructure rather than attempting to design and secure complex internal agents themselves.

They will gladly pay a premium for such mission-critical, value-added services.

In their usual calm manner, Veeva isn’t overpromising, but with the AI teams reporting directly to Peter, you can easily sense the massive priority being placed on this next growth driver.

CRM Migration Noise: Reduced Impact

Over the past few years, market anxiety has circled around the risk of losing major customers to Salesforce as Veeva transitions legacy clients over to its native, in-house Vault CRM architecture.

While some clients did switch (6 out of an initial list of 20 tracking candidates), 10 have officially stayed with Veeva, with 4 still undecided.

However, focusing purely on these headline retention numbers misses the broader forest.

High-profile, multi-year enterprise agreements with mega-caps like Teva and Merck KGaA (neither of whom were on that original top 20 migration list), alongside a stellar 80% migration win rate, are clear indications of structural strength.

More importantly, as illustrated in the trend data, Commercial Solutions—where the CRM software resides—has contributed a shrinking percentage to overall sales, with R&D Solutions contributing more since FY2024.

When you factor in the strong, defensive growth of Crossix data analytics within this same segment, legacy CRM’s relative weight inside the portfolio is naturally diminishing.

It’s not that Commercial Solutions is losing sales, but rather that R&D Solutions is simply growing at a much faster clip.

Forward Valuation: A Steep Discount

The prolonged valuation correction across the enterprise software landscape has gift-wrapped a remarkable margin of safety for this life sciences monopoly.

Historically, the market assigned a steep “perfection premium” to Veeva, frequently pricing the high-moat compounder at a multiple of 50x to 60x earnings.

Today, that multiple has compressed to a generational low of just ~19x forward PE (Non-GAAP), which translates to an attractive PEG ratio of just ~1.4.

Paying this price for a premium enterprise monopoly with an insulated, AI-driven growth runway is a no-brainer for me.

My Purchase. My Conviction?

Tractor Supply and Veeva are the rare few stocks in my portfolio that are still in the red, even after holding them for more than five years. And yes, that is the case even after accounting for the recent opportunistic purchases shown above.

There were moments when they crossed into the green, but their lead wasn’t substantial enough to withstand the current downturns.

As I shared in my recent Football Team of Stocks post, there are times when you need to ruthlessly sell the players that underperform. But for these two specific positions, I am holding onto my conviction for two core reasons:

• Sound Long-Term Business Prospects: Both businesses remain structurally sound and are steered by visionary leaders who possess absolute clarity on how to execute the next leg of growth.
  
• Controlled Position Size: Both occupy a relatively small allocation in my overall portfolio, which naturally caps my downside risk. However, if they get it right, both will benefit from compounding EPS and valuation multiple expansion—ultimately driving meaningful alpha for my portfolio.

Only time will tell whether the market or I have this one right. Perhaps we are both right—just on completely different time horizons.