Warren Buffett surprised investors with his recent purchase of Ulta Beauty (NASDAQ: ULTA) stock. A cosmetics stock seems like an unlikely buy for a portfolio heavy with financial stocks and old standards, but Ulta fits the Buffett model quite well. Let's see why, and if Ulta might be a good pick for you, too.

Buffett-led Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) opened a new position in Ulta stock in the second quarter with a purchase of 690,106 shares. These shares are worth more than $260 million and account for a 1.4% stake in the company, although they account for only 0.1% of Berkshire Hathaway's equity portfolio.

Ulta is a chain of beauty stores, and I say beauty rather than cosmetics because it has a niche model that's fairly all-inclusive of beauty products and services. It stands out from other cosmetics and beauty companies in two important ways, which gives it the competitive edge that's important to Buffett when he looks for great businesses.

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Source Fool.com