In this article, we will take a look at the 10 best hair care stocks to buy now. If you want to skip our industry background and jump ahead to the top five stocks in this list, then take a look at the 5 Best Hair Care Stocks To Buy Now.
The global hair care and beauty industries were among the very few sectors of the market that could be considered recession-resistant since they operate as a subcategory of the consumer staples industry, which include products such as groceries or cleaning supplies that consumers buy regardless of the state the economy is. However, the COVID-19 crisis brought a shift in that perspective as lockdowns and consumer apprehension regarding infections caused widespread retail and salon store closures, which led to the weakening sales of various beauty and personal care products in the global market. In light of these developments, key players in the industry are working up ways to attract more consumers. With consumer preferences shifting towards more natural and organic products, cosmetic companies have starting focusing more on developing and launching products to meet demands.
The changing fashion trends and rise in awareness of the availability of new, more effective, and safer hair care products have led to a significant increase in the use of these products, which in turn boosted the hair care market globally. According to a market report published by Fortune Business Insights, the global hair care market is projected to grow from $77.15 billion in 2021 to $112.97 billion in 2028 at a CAGR of 5.6% in the forecast period, 2021-2028.
Investors are racking up shares of hair care stocks and making hefty investments in the sector, as it still provides a notable hedge against rising inflation. Some of the top hair care plays to hedge against inflation include The Procter & Gamble Company (NYSE:PG), The Estée Lauder Companies Inc. (NYSE:EL), and Ulta Beauty, Inc. (NASDAQ:ULTA), among others listed below.
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Our Methodology
To determine the best hair care stocks to buy now, we reviewed major players operating in the cosmetics industry. Along with each selection, we have mentioned analyst ratings, potential growth catalysts, and hedge fund sentiment, ranking our picks in ascending order based on the number of hedge fund shareholders.
Best Hair Care 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 personal care company headquartered in Clichy, Hauts-de-Seine, that operates as one of the world’s largest cosmetics companies. It focuses heavily on hair color, skin care, sun protection, make-up, perfume, and hair care products for consumers around the globe.
On August 9, Deutsche Bank analyst Tom Sykes raised his price target on L’Oréal S.A. (OTC:LRLCY) to EUR 400 from EUR 385 and maintained a Buy rating on the shares of the company. As of Q2 2022, the company disclosed revenue of $9.48 billion, surpassing analysts’ estimates by $536.10 million.
As of the end of Q2 2022, 3 hedge funds owned positions in L’Oréal S.A. (OTC:LRLCY) with an aggregate value of $873.35 million. The majority of these stakes was held by billionaire Ken Fisher’s Fisher Asset Management, whose position consisted of 12.66 million shares worth almost $872.26 million.
L’Oréal S.A. (OTC:LRLCY) joins The Procter & Gamble Company (NYSE:PG), The Estée Lauder Companies Inc. (NYSE:EL), and Ulta Beauty, Inc. (NASDAQ:ULTA) in the list of some of the best hair care stocks to buy now.
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.”
9. Nu Skin Enterprises, Inc. (NYSE:NUS)
Number Of Hedge Fund Holders: 12
Nu Skin Enterprises, Inc. (NYSE:NUS) is an American multilevel marketing company that develops and sells personal care products and dietary supplements under its Nu Skin and Pharmanex brands. The company offers several product-lines for skin care and hair care, along with nutritional supplements and weight management products as well.
Citi analyst Chasen Bender raised the price target on Nu Skin Enterprises, Inc. (NYSE:NUS) to $47 from $45 and kept a Neutral rating on the shares post the Q2 results on August 8. Despite facing macro challenges around the world, the analyst is encouraged to hear that the company continues to make progress on its Nu Vision 2025 strategy.
At the end of the second quarter, 12 out of the 895 hedge funds tracked by Insider Monkey reported bullish bets on Nu Skin Enterprises, Inc. (NYSE:NUS). The aggregate value of Q2 hedge fund holdings was recorded at $180.8 million. Jim Simons’ Renaissance Technologies was the leading shareholder of the firm during the quarter, with 2.82 million shares valued at $122 million.
8. Olaplex Holdings, Inc. (NASDAQ:OLPX)
Number Of Hedge Fund Holders: 18
Olaplex Holdings, Inc. (NASDAQ:OLPX) is a science-enabled, technology-driven beauty company that offers products through a global omni-channel platform serving the professional, specialty retail, and direct-to-consumer (DTC) channels. The company’s product portfolio consists of 11 products specifically developed to provide a regimen for hair care.
On August 10, Piper Sandler analyst Korinne Wolfmeyer lowered the price target on Olaplex Holdings, Inc. (NASDAQ:OLPX) to $21 from $24 and kept an Overweight rating on the shares post the Q2 results. Although the company reported a top line and margin beat this quarter, the analyst stated that, “we’re not surprised to see management again leave guidance unchanged.” Wolfmeyer recommends buying shares of the company on its post-earnings weakness.
The California-based hair care products retailer reported an adjusted EPS of $0.14, beating consensus estimates by $0.01. In addition, Olaplex Holdings, Inc. (NASDAQ:OLPX) posted revenues of $210.90 million, above the consensus forecast of $201.25 million.
Among the hedge funds being tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group is a leading shareholder in Mind Medicine Olaplex Holdings, Inc. (NASDAQ:OLPX) with 3.16 million shares worth more than $44.57 million. Overall, 18 hedge funds reported holding stakes in Olaplex Holdings, Inc. (NASDAQ:OLPX) as of the second quarter of 2022.
7. Helen of Troy Limited (NASDAQ:HELE)
Number Of Hedge Fund Holders: 20
Helen of Troy Limited (NASDAQ:HELE) is an American publicly traded designer, developer and worldwide marketer of consumer and beauty products. It distributes consumer products through its leading brands, including its hair care segment Bed Head and Hot Tools Professional.
Earlier this July, Raymond James analyst Olivia Tong initiated coverage of Helen of Troy Limited (NASDAQ:HELE) with a Market Perform rating and no price target, stating that the company improved its long-term trajectory in recent years behind its Transformational Strategy. However, she also sees a host of challenges ahead, which clouds medium-term visibility.
At the end of the second quarter of 2022, 20 hedge funds in the database of Insider Monkey held stakes worth $159.3 million in Helen of Troy Limited (NASDAQ:HELE). Of these, Ken Fisher’s Fisher Asset Management was the largest stakeholder, with a stake worth approximately $67.45 million.
6. Unilever PLC (NYSE:UL)
Number Of Hedge Fund Holders: 21
Unilever PLC (NYSE:UL) is a British multinational consumer goods company that offers products in the categories of beauty and personal care, hair care, and foods and refreshment. Founded in 1894, the company owns popular brands such as Comfort, Dove, Lifebuoy, Lux, Rexona, and Sunsilk.
On July 26, Deutsche Bank analyst Tom Sykes upgraded Unilever PLC (NYSE:UL) to Buy from Hold with an unchanged price target of 4,600 GBp, stating that “commodity headwinds are now turning to tailwinds for 2023.” According to the analyst, Unilever has the potential for margin increases in 2023, at a time when “many companies in the market will be seeing margin declines.” Although he remains cautious on the overall consumer outlook, he sees Unilever PLC (NYSE:UL) as “at least a relative outperformer.”
With 6.96 million shares priced at $319.1 million, Gardner Russo & Gardner was the biggest shareholder of Unilever PLC (NYSE:UL) at the end of Q2. In total, 21 hedge funds owned positions worth $813.3 million in the company at the end of the second quarter, down from 23 funds in the previous quarter.
The Procter & Gamble Company (NYSE:PG), The Estée Lauder Companies Inc. (NYSE:EL), and Ulta Beauty, Inc. (NASDAQ:ULTA) are met by Unilever PLC (NYSE:UL) in the list of the best hair care stocks to invest in.
Here is what Mayar Capital had to say about Unilever PLC (NYSE:UL) in its Q2 2022 investor letter:
“Inflation was a persistent theme over 2021 for our consumer goods holdings, including Unilever (NYSE:UL). Supply chain difficulties as the global economy opens back up has increased input prices – both material and transportation costs – and these businesses have not yet passed on these cost increases, though we know from history that this can take time. In addition to the general inflation theme, Unilever made headlines at the beginning of the new year with rumours that it was considering buying GSK’s consumer brand portfolio, followed by a formal offer of GBP 50 billion for the business. After an almost unanimously negative reaction from the market, CEO Alan Jope commented later that ‘we do not intend to pursue major acquisitions in the foreseeable future’.”
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