In this article we will take a look at the 10 best beauty stocks to invest in. You can skip our detailed analysis of these stocks, and go directly to the 5 Best Beauty Stocks to Invest In.
The cosmetics industry encompasses companies that manufacture, sell, and market beauty products like makeup, shampoos, lotions, fragrances, creams, etc. It is undoubtedly one of the fastest-growing industries in the world, generating over $500 billion in sales in 2020. This has certainly made the cosmetic stocks gain value and grab the attention of investors around the globe.
The dawn of 2020 brought uncertainties in every aspect of life and the cosmetic industry is no exception. According to National Purchase Diary NPD, during the first half of 2020, the sales of makeup products, especially lipsticks, declined by 24% due to the constant use of facemasks. Major cosmetic companies like Coty Inc. (NYSE: COTY) saw their share price decline by 52% in March. Similarly, the stock price of Ulta Beauty, Inc. (NASDAQ: ULTA) also declined by 29% in the initial days of the pandemic. Though these stocks are already back on their feet, Vogue Business predicts that color cosmetic sales are expected to decline at an average rate of 2% this year.
On the other hand, the skincare sector thrived during the pandemic. Instead of going for some chemical-induced effective products, consumers are beginning to prefer to use natural and organic products for their skin. According to a report published by McKinsey & Company, 36% of consumers supported the use of natural products over others. Global skincare sales are expected to hit $181 billion by 2025.
Due to the pandemic-induced lockdown, e-commerce sales also saw growth. In Q1 2021, Ulta Beauty, Inc. (NASDAQ: ULTA) reported an increase of 16% in online orders. The company’s overall sales grew by over 65% in Q1, making it one of the best beauty stocks to invest in.
According to a report by Allied Market Research, the global cosmetic company is expected to reach $463.5 billion by 2027, growing at a CAGR of 5.3%. These changing trends and boost in sales have definitely given increased the value of beauty companies, leaving a ton of opportunities for investors. Some major beauty giants like Inter Parfums, Inc. (NASDAQ: IPAR), Revlon, Inc. (NYSE: REV), and e.l.f. Beauty, Inc. (NYSE: ELF) are becoming the choices of investors due to their strong stock performance. Inter Parfums, Inc. (NASDAQ: IPAR) has shown consistent performance in the past, with the stock price soaring over 157% in the last five years. Similarly, e.l.f. Beauty, Inc. (NYSE: ELF) also saw a 21% growth in its net sales.
But investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context, and industry outlook in mind, let’s now discuss the 10 best beauty stocks to invest in. We took into account hedge fund sentiment, analysts’ estimates, fundamentals and growth catalysts while choosing these stocks. We ranked these stocks based on the number of hedge funds having stakes in them as of the end of the first quarter.
Best Beauty Stocks to Invest In
10. Natura &Co Holding S.A. (NYSE: NTCO)
Market Capitalization: $15.9 billion
Number of Hedge Fund Holders: 4
Natura &Co Holding S.A. (NYSE: NTCO) is Brazil-based personal care and cosmetic company with operations in over 73 countries. It is the parent company of some of the most famous beauty brands such as The Body Shop, Avon, Aesop, and Natura. Natura &Co Holding S.A. (NYSE: NTCO) ranks fifth on our list of the best beauty stocks to invest in.
In Q1 2021, Natura &Co Holding S.A. (NYSE: NTCO) generated 9.5 billion BRL in revenues, up 25% year-over-year from 7.5 billion BRL during the same period last year. The company also reported strong online sales, stating a growth of 166%. The Body Shop accounted for 51% of the total revenue, with digital sales growing by 119%. The NTCO stock has shown a smooth performance after hitting an all-time low of $8.7 in April 2020. Natura &Co Holding S.A. (NYSE: NTCO) stock has gained over 48.4% in the past year.
At the end of Q1 2021, 4 hedge funds, tracked in our database hold positions in Natura &Co Holding S.A. (NYSE: NTCO), worth $61.2 million.
Like The Estée Lauder Companies Inc. (NYSE: EL), Ulta Beauty, Inc. (NASDAQ: ULTA), Coty Inc. (NYSE: COTY), e.l.f. Beauty, Inc. (NYSE: ELF), Unilever PLC (NYSE: UL) and Nu Skin Enterprises, Inc. (NYSE: NUS), Natura &Co Holding S.A. (NYSE: NTCO) is one of the best beauty stocks to invest in.
9. Inter Parfums, Inc. (NASDAQ: IPAR)
Market Capitalization: $2.33 billion
Number of Hedge Fund Holders: 9
Inter Parfums, Inc. (NASDAQ: IPAR) is a New York-based perfume company that manufactures, sells, and markets fragrances. The company has been operational for the past 30 years. Inter Parfums, Inc. (NASDAQ: IPAR) owns some popular perfume companies, including Jean Philippe Fragrances, IP Beauty, and Interstellar Brands.
In Q1 2021, Inter Parfums, Inc. (NASDAQ: IPAR) generated over $198 million in revenue, up 37% at $144.8 million during the same period last year. The EPS stood at $0.87, beating the market estimate of $0.53. In the past year, IPAR stock has gained by 65.3%, and year-to-date growth was 24.5%.
Earlier in June, Inter Parfums, Inc. (NASDAQ: IPAR) announced its engagement with Italy-based luxury goods company, Salvatore Ferragamo, to become the global licensee for the Ferragamo perfumes. This would certainly increase the fragrance sales, which saw a decline during Covid-19 restrictions. At the end of Q1 2021, 9 hedge funds tracked by Insider Monkey hold positions in Inter Parfums, Inc. (NASDAQ: IPAR).
Like Nu Skin Enterprises, Inc. (NYSE: NUS), Coty Inc. (NYSE: COTY), and Ulta Beauty, Inc. (NASDAQ: ULTA), Inter Parfums, Inc. (NASDAQ: IPAR) is one of the best beauty stocks to invest in.
8. Nu Skin Enterprises, Inc. (NYSE: NUS)
Market Capitalization: $2.8 billion
Number of Hedge Fund Holders: 19
Nu Skin Enterprises, Inc. (NYSE: NUS) is seventh on our list of the best beauty stocks to invest in. It is a Utah-based company that manufactures, sells, and markets beauty products and beauty and self-care tools. The company started its foreign operations from Canada in 1990 and currently operates in over 50 countries. The famous subsidiaries of Nu Skin Enterprises, Inc. (NYSE: NUS) include Pharmanex LLC, Groviv, Big Planet, etc.
In Q1 2021, Nu Skin Enterprises, Inc. (NYSE: NUS) showed a 31% year-over-year growth in revenue at $577 million. American and the Asia Pacific accounted for 22% of the revenue. The EPS stood at $0.91, beating the market estimate of $0.72. The NUS stock gained 55.9% in the past year. The company has also announced a quarterly dividend of $0.38 per share and has paid $19.3 million in dividends in Q1.
As of Q1 2021, 19 hedge funds tracked by Insider Monkey have positions in Nu Skin Enterprises, Inc. (NYSE: NUS), worth $327 million.
Like The Estée Lauder Companies Inc. (NYSE: EL), Ulta Beauty, Inc. (NASDAQ: ULTA), Coty Inc. (NYSE: COTY), e.l.f. Beauty, Inc. (NYSE: ELF), Unilever PLC (NYSE: UL) and Natura &Co Holding S.A. (NYSE: NTCO), Nu Skin Enterprises, Inc. (NYSE: NUS) is one of the best beauty stocks to invest in.
7. e.l.f. Beauty, Inc. (NYSE: ELF)
Market Capitalization: $1.4 billion
Number of Hedge Fund Holders: 21
e.l.f. Beauty, Inc. (NYSE: ELF) is a multinational makeup brand dealing with skincare and makeup products. The company also manufactures makeup tools, including kits and cruelty-free makeup brushes. It is based in California, United States.
e.l.f. Beauty, Inc. (NYSE: ELF) released its Q4 FY21 earnings earlier in May 2021 and reported a 21% growth in net sales. The revenue for the quarter stood at $92 million, up from $74.7 million during the same period last year. The company recorded a net income of $36.8 million and shows a brighter outlook for 2021 as the sales are expected to reach $343 million to $350 million. The ELF has stock has gained over 60% in the past year. Moreover, DA Davidson has raised the price target on ELF stock to $35, rating it as a ‘Buy’.
Recently, e.l.f. Beauty, Inc. (NYSE: ELF) announced its first NFTs collection, which will feature three of the brand’s most famous products, dipped in gold, which will be sold via the Bitski platform.
Like The Estée Lauder Companies Inc. (NYSE: EL), Ulta Beauty, Inc. (NASDAQ: ULTA), Coty Inc. (NYSE: COTY), Unilever PLC (NYSE: UL), Natura &Co Holding S.A. (NYSE: NTCO), and Nu Skin Enterprises, Inc. (NYSE: NUS), e.l.f. Beauty, Inc. (NYSE: ELF) is one of the best beauty stocks to invest in.
6. Revlon, Inc. (NYSE: REV)
Market Capitalization: $761,000,000
Number of Hedge Fund Holders: 33
Revlon, Inc. (NYSE: REV) is one of the most famous cosmetic brands in America, mainly dealing in makeup and skincare products as well as fragrances. The company owns some really famous names in the beauty world, including Elizabeth Arden Inc, Charles Revson Inc, Almay Inc, etc.
In Q1 2021, Revlon, Inc. (NYSE: REV) generated $445 million in revenues, down from $453 million during the same period last year. The REV stock has soared by 41.9% in the past year and 26% year to date. The e-commerce sector accounted for 13% of the total revenue and showed 5% year-over-year growth. Sales at Elizabeth Arden grew by 17.9%, compared to the last year, and stood at $112.2 million. The company has launched a Global Growth Accelerator Program to chalk out the reinvestment strategy in order to maintain sustainable growth.
As of Q1 2021, 33 hedge funds tracked in our database have positions in Revlon, Inc. (NYSE: REV), worth $357 million. The number of hedge fund holders remained the same in Q4 2020.
Like The Estée Lauder Companies Inc. (NYSE: EL), Ulta Beauty, Inc. (NASDAQ: ULTA), Coty Inc. (NYSE: COTY), e.l.f. Beauty, Inc. (NYSE: ELF), Unilever PLC (NYSE: UL), Natura &Co Holding S.A. (NYSE: NTCO), and Nu Skin Enterprises, Inc. (NYSE: NUS), Revlon, Inc. (NYSE: REV) is one of the best beauty stocks to invest in.
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Disclosure. None. 10 Best Beauty Stocks to Invest In is originally published on Insider Monkey.
