In this article, we discuss the 10 best beauty stocks to buy now. If you want to skip our comprehensive review of the beauty industry, go directly to 5 Best Beauty Stocks To Buy Now.
The beauty industry has drastically changed from what it was decades ago. E-commerce sales, extensive ranges of high quality and affordable products, and an over-emphasis on beauty in the Instagram-inspired glitz of 2022 has made purchasing beauty products, and beauty stocks, all the more exciting. The beauty industry, generalizing a wide range of products such as makeup, haircare, skincare and personal care products, was worth $511 billion in 2021. And this burgeoning industry is expected to grow at a compound annual growth rate (CAGR) of 4.75% to clock in at more than $716 billion by 2025, and upwards of $784 billion by 2027.
Not just retail products, the beauty industry also comprises of the services that are given by hairdressers, make up artists, barbers, cosmetologists, etc. This sector employed approximately 622,700 workers in 2020 according to the US government Bureau of Labor Statistics, and is expected to grow at a ‘much faster than average’ industry rate of 19% in the period between 2020-2030. According to a survey by market research company Catalina, 71% of US respondents plan to spend as much, or more, on beauty and personal care products in early 2022 as they did before the start of the pandemic, while 52% plan to keep spending the same amount, whereas only 13% intend to reduce spending. This shows that beauty products have now somewhat entered the category of consumer staples, which are necessary purchases made regardless of inflation or fears of an economic downturn. As the average purchasing power of populations around the globe goes up, people now view expenditure on personal care and upkeep as an essential part of their budgets.
The pandemic dented overall demand in the beauty industry, and companies then turned towards digital marketing, using social media influencers to market products to highly engaged audiences. Global e-commerce sales in the beauty and health category are expected to reach $358 billion in 2026, according to Statista. But now that the pandemic restrictions are being lifted in the United States and the United Kingdom, and employment rates rise along with higher wages, spending on cosmetics has surged, exceeding pre-pandemic levels. Factors such as socializing, working from offices, and freedom from face mask mandates have resulted in a resurgence in the global demand for beauty products. The CEO of L’Oréal S.A. (OTC:LRLCY), a worldwide leader in beauty products, recently noted that the current inflationary environment had no effect on the company’s beauty products sales. Its US rival The Estee Lauder Companies Inc. (NYSE:EL) reported that its sales increased in every region during the last 3 months of 2021, with demand beating 2019 levels.
Photo by Charisse Kenion on Unsplash
Some of the hottest names in the beauty industry include Ulta Beauty, Inc. (NASDAQ:ULTA), The Procter & Gamble Company (NYSE:PG), and Unilever PLC (NYSE:UL). If you want to join the beauty bandwagon, we’ve prepared a list of the best beauty stocks to buy now.
We picked 10 industry leaders in the beauty segment, considering their market share, geographical diversification of products and services, future growth catalysts, as well as positive analyst ratings. To provide readers with the context for each stock’s popularity among elite hedge funds, we’ve also shared the hedge fund sentiment around each stock, according to the Q1 database of Insider Monkey.
10 Best Beauty Stocks To Buy Now
10. L’Oréal S.A. (OTC:LRLCY)
Number of Hedge Fund Holders: 3
L’Oréal S.A. (OTC:LRLCY) is a French company which offers a range of make-up, haircare, skincare and cosmetics products around the globe. It operates many popular brands including L’Oréal Paris, Garnier, Maybelline New York, Ralph Lauren and Prada.
During the World Economic Forum held in Davos on May 24, L’Oréal S.A. (OTC:LRLCY) CEO Nicolas Hieronimus noted that the recent inflationary pressures on the global markets did not impact sales of consumer beauty products, with the cosmetics giant beating Q1 2022 sales expectations despite an uncertain macro backdrop. On April 20, UBS analyst Guillaume Delmas raised the firm’s price target on L’Oréal S.A. (OTC:LRLCY) to €465 from €450, and maintained a ‘Buy’ rating on the company shares.
In 2021, L’Oréal S.A. (OTC:LRLCY) generated a revenue of $38.2 billion, which showed a 14.17% increase from the pre-pandemic levels of 2019. For Q1 2022, the company disclosed revenue of $9.77 billion, above analysts’ estimates by $223.2 million.
As of the end of Q1 2022, 3 hedge funds owned positions in L’Oréal S.A. (OTC:LRLCY) with a combined value of $1.04 billion. The majority of these stakes was held by billionaire Ken Fisher’s Fisher Asset Management, whose position consisted of 12.89 million shares worth almost $1.04 billion.
ClearBridge Investments, an asset management firm, highlighted many stocks in its Q4 2021 investor letter, and L’Oréal S.A. (OTC:LRLCY) was one of them. Here’s what the fund said:
“Economies in Asia, meanwhile, are taking the opposite approach on stimulus, with China lowering its reserve requirement ratio for banks to support flagging growth in the world’s second largest economy. Japan’s new government passed a large stimulus bill after its economy contracted in the third quarter. Despite these actions, sentiment remains decidedly negative in these regions. We continue to see solid consumer demand in Asia, which has benefited our luxury and cosmetics holdings L’Oreal.”
L’Oréal S.A. (OTC:LRLCY) is one of the best beauty stocks to buy now, just like Ulta Beauty, Inc. (NASDAQ:ULTA), The Procter & Gamble Company (NYSE:PG), and Unilever PLC (NYSE:UL).
9. Inter Parfums, Inc. (NASDAQ:IPAR)
Number of Hedge Fund Holders: 10
Inter Parfums, Inc. (NASDAQ:IPAR) is a New York-based firm which makes and sells a range of perfumes, scents and colognes. Its popular brands include Jimmy Choo, Kate Spade, Abercrombie & Fitch, and GUESS, to name a few.
On May 16, Citi analyst Wendy Nicholson upgraded Inter Parfums, Inc. (NASDAQ:IPAR) to ‘Buy’ from ‘Neutral’ with an unchanged price target of $99. She cited “favorable tailwinds” in the fragrance space, and noted the firm’s track record of gaining market share, as well as its current valuation which represents a discount to its history.
The first quarter database of Insider Monkey reported 10 hedge funds with stakes in Inter Parfums, Inc. (NASDAQ:IPAR), with a collective price tag of $97.28 million. The same number of hedge funds were bullish on the company shares a quarter earlier as well. Of these 10, the largest shareholder of Inter Parfums, Inc. (NASDAQ:IPAR) in the first quarter was Royce & Associates with a $64.4 million position.
For the first quarter, Inter Parfums, Inc. (NASDAQ:IPAR) posted an EPS of $1.10, above analysts’ forecasts by $0.14. The quarterly revenue showed year-on-year growth of 26.3%, coming in at $250.7 million which also beat estimates by $10.6 million.
8. Nu Skin Enterprises, Inc. (NYSE:NUS)
Number of Hedge Fund Holders: 17
Nu Skin Enterprises, Inc. (NYSE:NUS) is a Utah-based firm which develops, manufactures and sells beauty and wellness products around the globe. It offers several product-lines for skincare, along with nutritional supplements and weight management products as well. The company sells its products through the Nu Skin, Pharmanex, and ageLOC brands.
In February, Jefferies analyst Stephanie Wissink reiterated a ‘Buy’ rating on Nu Skin Enterprises, Inc. (NYSE:NUS) shares, and bumped the price target to $75 from $61. The analyst noted that she left the company’s analyst day with a higher level of confidence in its growth trajectory, further noting that the firm’s innovation pipeline is rich, customer and affiliate tools are in place, and the demand activation methods are bearing fruit.
At the end of the first quarter, 17 out of the 912 hedge funds tracked by Insider Monkey reported bullish bets on Nu Skin Enterprises, Inc. (NYSE:NUS), the same number of hedge funds as the quarter before. The aggregate value of Q1 hedge fund holdings was recorded at $198.3 million. Jim Simons’ Renaissance Technologies was the leading shareholder of the firm during the first quarter, with 2.67 million shares valued at $127.9 million.
In April, Nu Skin Enterprises, Inc. (NYSE:NUS) announced a collaboration with Infosys (NYSE:INFY), taking advantage of the latter’s Infosys Equinox human-centric digital commerce platform to provide engaging and innovative experiences for customers and affiliates, and enhance customer engagement across multiple touch points including websites, mobile applications and smart devices.
Nu Skin Enterprises, Inc. (NYSE:NUS) also boasts a rich dividend history, recording 11 consecutive years of payout increases. It offers a 3.34% yield as of May 27. The company’s EPS for the first quarter was registered above estimates by $0.04. Quarterly revenue also beat expectations by $25.2 million, coming in at $604.9 million.
7. e.l.f. Beauty, Inc. (NYSE:ELF)
Number of Hedge Fund Holders: 20
e.l.f. Beauty, Inc. (NYSE:ELF) offers skin care and cosmetics products, focusing on the eyes, lips, face, kits, tools and skin care categories. The company offers its products through the brands; e.l.f. Cosmetics, e.l.f. Skin, Well People, and Keys Soulcare.
For the quarter ending March, e.l.f. Beauty, Inc. (NYSE:ELF) disclosed earnings per share of $0.13, which registered above estimates by $0.07. The revenue for the quarter stood at $105.1 million, up 13.45% year-on-year and beating estimates by $13.9 million.
On May 26, Morgan Stanley analyst Dara Mohsenian kept an ‘Overweight’ rating on e.l.f. Beauty, Inc. (NYSE:ELF) shares, along with a price target of $39. The analyst called the firm his preferred small cap stock pick, after it beat Q4 results and posted positive FY23 guidance. Mohsenian noted that the company expressed confidence over their supply chain and a post-Covid recovery in the cosmetics category, whilst also asserting the view that a weaker macro backdrop offers more of an opportunity than risk for the firm’s lower-end portfolio.
Out of all the hedge funds tracked by Insider Monkey, 20 reported ownership of positions in e.l.f. Beauty, Inc. (NYSE:ELF) with a total value of $100.5 million. In comparison, 19 hedge funds held $138.1 million worth of stakes in the cosmetics company a quarter ago. Renaissance Technologies was its largest shareholder at the end of the first quarter, with a stake worth more than $24 million.
6. Unilever PLC (NYSE:UL)
Number of Hedge Fund Holders: 23
Unilever PLC (NYSE:UL) is a multinational consumer goods giant, offering products in the categories of beauty and personal care, home care, and foods and refreshment. The London-based company was founded in 1894, and today owns popular brands such as Comfort, Dove, Lifebuoy, Lux, Rexona, and Sunsilk, as well as popular food brands including Ben & Jerry’s, Knorr, and Wall’s.
With 7.82 million shares priced at $356.6 million, Gardner Russo & Gardner was the biggest shareholder of Unilever PLC (NYSE:UL) at the end of March. In total, 23 hedge funds owned positions worth $1.01 billion in the company at the end of the first quarter, which is the same number of hedge funds as the quarter before.
Unilever PLC (NYSE:UL) posted $14.48 billion in revenue for the first quarter of 2022, beating analysts’ expectations by $560.2 million. It generated annual revenue of $62.04 billion for 2021, which was a 7.08% increase from 2020.
On March 14, Bernstein analyst Bruno Monteyne upgraded Unilever PLC (NYSE:UL) to ‘Market Perform’ from ‘Underperform’ with a price target of £3,300, down from £3,500. As a consumer goods company with one of the most extensive global footprints, Unilever PLC (NYSE:UL) is poised to benefit from an inflationary environment as it can easily pass on the rise in prices to its customers. It is also a solid dividend-payer, offering a 4.56% yield to shareholders as of May 31.
Along with Ulta Beauty, Inc. (NASDAQ:ULTA) and The Procter & Gamble Company (NYSE:PG), Unilever PLC (NYSE:UL) is one of the leading beauty stocks to buy now.
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Disclosure. None. 10 Best Beauty Stocks To Buy Now is originally published on Insider Monkey.