Beauty Stocks, You Should Have a Look at In 2024
In the ever-evolving landscape of beauty stocks, there’s a compelling allure beckoning investors with promising potential. Therefore, these stocks present compelling opportunities for those keen on tapping into the cosmetics and personal care industry’s growth.
For example, In the past year, the S&P 500 Consumer Staples Sector Index showed a total return of 3.6%, contrasting with the S&P 500 Consumer Discretionary Sector Index, which saw a -14.1 % return. Meanwhile, the Russell 1000 experienced a -12.5% return.
The beauty market offers diverse options, from established giants to emerging disruptors. As consumer preferences shift towards wellness and sustainability, savvy investors are eyeing companies aligned with these trends.
Understanding the dynamic interplay of consumer behaviour, technological innovations, and market dynamics is crucial for making informed investment decisions in this sector.
Beauty Stocks With The Most Hedge Fund Investors
Our analysis uses Insider Monkey’s database of 943 hedge funds to identify the top 9 beauty and cosmetics stocks with the most hedge fund investors.
- Waldencast plc (NASDAQ:WALD) sees interest from 7 hedge funds after signing a deal to acquire a 60% stake in its Southeast Asian distributor.
- Grove Collaborative Holdings, Inc. (NYSE:GROV), an e-commerce retailer of natural beauty products, had 13 hedge fund backers with a total investment of $5.8 million.
- European Wax Center, Inc. (NASDAQ:EWCZ), offering waxing services, had 16 hedge fund holders. Its Q4 revenue grew by 18.6% year over year.
- Olaplex Holdings, Inc. (NASDAQ:OLPX) faces pressure after a disappointing Q4 report. Cowen downgraded the stock to Market Perform, citing soft demand in 2023.
- Edgewell Personal Care Company (NYSE:EPC) surpassed Q1 estimates and expects a 2% to 4% sales increase for the year.
- Unilever PLC (NYSE:UL) saw 22 hedge funds invest, with its quarterly dividend increasing by 8.6%.
- The Beauty Health Company (NASDAQ:SKIN) is known for HydraFacial, attracting 24 hedge funds.
- Coty Inc (NYSE:COTY) received positive comments from Deutsche Bank, highlighting its undervalued status.
- e.l.f. Beauty, Inc. (NYSE:ELF) impressed with a 200% gain over the past year, with 29 hedge funds invested.
Fastest Growing Beauty Stocks
We rank the top cosmetics & beauty stocks using a growth model that combines a 50/50 weighting of their most recent quarterly year-over-year (YOY) revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are vital for a company’s success. Relying on just one growth metric could mislead due to possible accounting anomalies like tax law changes or restructuring costs in a particular quarter.
Fastest Growing Cosmetics Stocks
| Company | Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) |
| Olaplex Holdings Inc. (OLPX) | 11.81 | 7.7 | 70.7 | 38.6 |
| e.l.f. Beauty Inc. (ELF) | 39.51 | 2.1 | 80.0 | 26.3 |
| Ulta Beauty Inc. (ULTA) | 421.47 | 21.6 | 25.0 | 16.8 |
Source: YCharts
Beauty Stocks Top Picks
The Estée Lauder Companies Inc. (NYSE:EL), a cosmetics giant, had 44 hedge funds interested, led by Fundsmith LLP with a $1.4 billion investment.
Alternatively, Ulta Beauty stands out in cosmetics retail, with steady sales growth and a unique advantage from its in-store hair salons. Moreover, L’Oreal, the world’s largest cosmetics company, has diversified its brand portfolio and invested heavily in e-commerce. Interparfums specializes in fragrances, operating above pre-pandemic levels and continuing to expand its brand partnerships.
According to hedge fund interest and market performance, these companies, from giants to niche players, represent the best investment opportunities in the beauty industry.
Particularity of The Basic Consumer Goods Market
The basic consumer goods market, characterized by consumer staples, encompasses essential items regardless of economic fluctuations. These goods, ranging from food, beverages, and personal care products to household essentials, exhibit a unique resilience in consumer spending patterns.
Unlike discretionary purchases, these staples are indispensable, forming the foundation of everyday life. Moreover, the sector is non-cyclical, ensuring sustained demand irrespective of economic cycles or seasonal variations. This stability provides a reliable revenue stream for businesses, offering a degree of insulation against market volatility.
Notably, the demand for cosmetic and hygiene products remains robust, driving steady growth and fostering a dependable market landscape for companies operating within this segment. Such characteristics underscore the basic consumer goods market’s enduring appeal and inherent strength.
Resilience in the Beauty Sector: Thriving Amid Economic Challenges
Analysts credit this resilience to consumer demand for products enhancing appearance and well-being. Luxury brands and affordable options alike contribute to the industry’s broad appeal. For instance, e.l.f. Beauty, Inc. in California saw a 50% revenue increase in the fiscal third quarter and raised its financial outlook. CEO Tarang Amin noted no slowdown in demand even in the recession, with certain product categories seeing growth.
Moreover, the beauty market has been growing, even as other sectors struggle with inflation and interest rate hikes. A Wall Street Journal report noted a 5% increase in mass-market cosmetics sales in Q3 2023, driven by volume and pricing.
However, the beauty industry faces challenges, such as consumer cutbacks on discretionary spending, affecting company forecasts. NielsenIQ reported a 2.1% drop in face care item sales year-over-year.
In this tough environment, companies with budget-friendly offerings are doing well. Giants in beauty and cosmetics rely on low-priced products to balance out losses from luxury items. L’Oreal’s CEO Nicolas Hieronimus mentioned relying on Maybelline and L’Oreal Paris for consumers unable to afford expensive mascara.
How to Invest in Beauty And Aesthetics?
The simplest way is to invest in companies that are already established and recognized. It is possible to invest in manufacturing and distribution companies, but also in beauty salons and wellness institutes.
It’s important to study the sector carefully before any investment and to study each company’s performance, history, price-to-earnings ratio, and net revenue per fiscal year development potential.
Investing in companies at the start of the process is also possible. In this case, you must pay particular attention to the management team and the business model. Investing in beauty and aesthetics start-ups is a higher risk but can be very profitable if successful.
Finally, it is possible to invest directly in beauty products and cosmetics. This can be done by purchasing shares from companies like L’Oréal or Estée Lauder or investing in specialized funds.
The big cosmetics brands are safe bets and generally have a solid development strategy. They are also well established in emerging countries, representing a growing market.
