In this article, we will discuss: 10 Best Hair Care Stocks To Buy Now.
According to Fortune Business Insights, in 2023, the hair care industry was estimated to be worth $99.52 billion globally. Between 2024 and 2032, the market is projected to expand at a CAGR of 10.4% from $106.91 billion to $213.47 billion. In 2023, Europe held a 36.43% market share, leading the hair care industry.
The demand for hair care products has increased as a result of the growing acceptance of longer hairstyles by males and the growing popularity of hair coloring. According to a survey conducted in 2020 by Garnier, 42% of 2,000 Americans discovered new techniques for dyeing their gray hair. Secondly, an increasing number of consumers are dealing with hair problems such as dandruff, graying hair, and hair loss, which will likely lead to a rise in the use of hairdressing products. According to survey results released in January 2022 by the Dermatology & Cutaneous Surgery Institute (DCSI), over two-thirds of Americans over the age of 35 experience issues with hair thinning and loss. Furthermore, the World Health Organization (WHO) released estimates showing that 30% of Japanese people were over 60 in 2020. Thirdly, there is an increasing emphasis on the development of organic and natural products to meet rising product demand. For example, Australian scalp care brand Straand made its UK debut in November 2023. To create product distinctiveness in the very competitive market, the company concentrates on creating cruelty-free and microbiome-centric products.
Specifically, as we have mentioned in our article, “20 Cheap Alternatives to Aveda Shampoo,” the global luxury hair care market was dominated by the luxury shampoo segment, which held a revenue share of approximately 30.5% in 2023.
According to a Cirana report, sales of hair products in the prestige market rose by 10% YoY in the first half of 2024, based on dollars, with styling and treatments showing the fastest rate of growth within the category. The trend of premiumization is still driving growth; three times as many hair products as lower-priced items have been added in the last three years, and these products now make up 25% of the category’s unit sales, compared with 15% just three years ago. Being the only beauty category where the bulk of sales takes place online, the premium hair market also makes for an intriguing channel tale. In fact, with double-digit growth in sales, the e-commerce channel is not slowing down at all.
One hair care product that is gaining popularity is dry shampoo. As we have stated in our article, “11 Dry Shampoo Alternatives for Every Hair Color and Type,” the dry shampoo market is expected to grow from $5.35 billion in 2023 to a valuation of $9.18 billion in 2030.
As we look ahead, Frost & Sullivan’s report reveals that the hair care market is changing due to disruptive technology like artificial intelligence, customized solutions, and innovative ingredients. The “skinification” movement places a strong emphasis on scalp health, which is driving businesses to use regenerative medicine and useful components like biotin and peptides. Personalized care is improved via IoT-enabled grooming products and AI-powered scalp analysis technologies. Companies are adopting waterless products, recyclable packaging, and a reduction in toxic chemicals as a significant priority in sustainability. Companies that want to satisfy changing customer preferences and lessen their environmental effect must promote scalp health and integrate next-generation technologies. These developments spur expansion and help brands maintain their competitiveness in a market that is changing quickly.
Benoit Butruille, Growth Expert and Principal Consultant, TechVision at Frost & Sullivan, stated:
“Hair and scalp care is booming, and it is of great interest to understand the innovations and strategies driving this growth. Technologies such as AI are being used to develop smart hair care devices. Additionally, sustainable practices are becoming increasingly important as more customers seek products made with ethically sourced, eco-friendly ingredients.”
With that said, here are the 10 Best Hair Care Stocks To Buy Now.
A customer in a franchised store trying out hair color products.
Methodology:
We sifted through holdings of hair care ETFs and online rankings to form an initial list of 20 hair care stocks. Then we selected the 10 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
10. Coty Inc. (NYSE:COTY)
Number of Hedge Fund Investors: 23
Coty Inc. (NYSE:COTY) licenses luxury and high-end brands including Gucci, Burberry, Hugo Boss, Davidoff, and Calvin Klein for its fragrance division; its consumer cosmetics business is focused on acquired mass brands like Rimmel, CoverGirl, Max Factor, Sally Hansen, and Bourjois. Most importantly, the company sells haircare products under Philosophy and other brands.
Europe accounts for over 44% of the cosmetics company’s revenue, followed by the Americas (42%), Asia-Pacific (14%), and other regions. A German investment company called JAB owns a majority 53% share.
Sue Nabi, who joined Coty Inc. (NYSE:COTY) as CEO in 2020, has improved the company’s performance since taking over by keeping costs under control, reviving brand advertising, and focusing the company’s attention on innovation because of her 20 years of experience in the beauty industry. In light of this, following the pandemic lows, sales growth and profitability both grew. Since the COVID-19, sales have increased by 32.14%.
Strong financial performance in Q4 2024, particularly in the luxury fragrance industry, and strategic execution across high-growth markets were the reasons given by Bank of America analyst Anna Lizzul for maintaining a Buy rating on the beauty company. Their $14 price estimate supports a premium valuation by taking into account Coty’s better growth profile, margin expansion, and leverage reduction initiatives.
Reiterating an Overweight rating with a $13 price target, Piper Sandler believes that Coty’s continuous execution and realistic expectations are essential to the company’s optimistic future. Despite negative sentiment from peers, the firm underlines robust margins and optimism for the global beauty industry.
Steve Cohen’s Point72 Asset Management is the largest shareholder in the company, with 5,582,064 shares worth $55.93 million.
9. Sally Beauty Holdings, Inc. (NYSE:SBH)
Number of Hedge Fund Investors: 24
American-based Sally Beauty Holdings, Inc. (NYSE:SBH) is a professional retailer of beauty products. Operating areas for Sally Beauty include the US, Puerto Rico, UK, Belgium, Canada, Chile, Colombia, Mexico, Peru, France, Ireland, Spain, Germany, and the Netherlands. Sally Beauty Supply and Beauty Systems Group are the two business segments that make up the company.
Providing up to 8,000 products for hair color, hair care, skincare, and nails through professional lines like Wella, Clairol, OPI, Conair, and Hot Shot Tools, as well as proprietary brands like Ion, Bong Bar, Beyond the Zone, and Silk Elements, Sally Beauty stores cater to both retail customers and salon professionals.
Up to 10,500 professionally branded products, such as Paul Mitchell, Wella, Matrix, Schwarzkopf, Kenra, Goldwell, Joico, and CHI, are sold in Beauty Systems Group stores under the CosmoProf or Armstrong McCall brands, in partnership with the company’s outside sales consultants. These products are meant to be used in salons and resold by salons to retail customers.
Exceeding the average estimate of $931.68 million, the company reported Q3 2024 revenue of $942 million, a 1.22% YoY rise. Same-store sales climbed by 1.5% YoY, propelled by strong performance in both the Sally Beauty and Beauty Systems Group (BSG) segments. CEO Denise Paulonis stated that marketing initiatives, market expansion, and digital improvements have resulted in a favorable response from consumers, which has led to an increase in the number of new and reactivated customers. Sally Beauty Holdings, Inc. (NYSE:SBH) surpassed projections by achieving an adjusted gross margin of 51% and an adjusted operating margin of 8.9% YoY.
Ken Fisher’s Fisher Asset Management is the largest shareholder in the company, with 2,683,930 shares worth $28.80 million.
8. Spectrum Brands Holdings, Inc. (NYSE:SPB)
Number of Hedge Fund Investors: 30
Spectrum Brands Holdings, Inc. (NYSE:SPB) manufactures consumer goods and household needs. The company supplies personal care, grooming supplies, consumer batteries, home locksets, and residential builders’ hardware. The corporation oversees the Home and Personal Care, Global Pet Care, and Home and Garden product-focused business areas. Remington is the brand under which the company provides haircare products.
It produces, markets, and ships its goods throughout Latin America, North America, Europe, the Middle East, and Africa.
Revenue of $779.4 million was recorded by the company for the Q3 of 2024, exceeding the consensus expectation of $755.33 million by 6% YoY. Strong operating momentum across all businesses has resulted in favorable year-to-date net sales growth, according to CEO David Maura. The gross margin increased by 310 basis points from the previous year to 38.9%. After investing $23 million on brand and innovation, Adjusted EBITDA (which does not include investment income) came in at $93.6 million, while net income increased to $191.3 million YoY. Adjusted EBITDA margins, which do not include investment income, were 12.0%, while net income margins rose by 2.5% year over year. For the entire year, the company now projects adjusted EBITDA growth of almost 20%.
However, Canaccord Genuity’s Brian McNamara kept his Hold rating on Spectrum Brands and raised the price objective to $91. The Hold rating was due to worries about declining margins and the requirement for continuous sales growth, despite robust Q3 sales and e-commerce growth. The improved adjusted EBITDA projection from Spectrum Brands shows optimism, but there are still issues with future profitability as per the analyst.
Nonetheless, Spectrum Brands Holdings, Inc. (NYSE:SPB) has strong financial health, and its brand Remington is renowned for haircare products and tools, making it one of the Best Hair Care Stocks To Buy Now.
7. Church & Dwight Co., Inc. (NYSE:CHD)
Number of Hedge Fund Investors: 36
The world’s largest manufacturer of baking soda is Church & Dwight Co., Inc. (NYSE:CHD). Beyond baking soda, its product line includes goods with broad category appeal, such as the affordable haircare brand Batiste, OxiClean, Vitafusion, WaterPik, Hero, and TheraBreath. These brands, combined with Arm & Hammer, account for around 70% of the company’s yearly sales and profits.
The company still receives more than 80% of its sales from its native US market, despite its efforts to expand the market for its products.
The Q2 2024 results from Church & Dwight Co., Inc. (NYSE:CHD) exceeded forecasts, with organic sales growth of 4.7% and adjusted earnings per share (EPS) of $0.93, exceeding the $0.83 estimate. The impressive results were the outcome of the company’s successful product launches, improvements in market share across multiple categories, and strong overseas performance.
The firm anticipates full-year organic sales growth of about 4% and adjusted EPS growth of between 8% and 9% despite a difficult macroeconomic environment.
Robert Moskow, an analyst with TD Cowen, kept the company at a Buy rating with a $114 price target. Moskow highlighted the robust Q2 results, which surpassed forecasts for both sales and EPS. CHD has a competitive advantage due to its organic sales growth, improved gross margin, and gains in market share in certain categories, even with a cautious outlook for the second half of 2024 due to softening category trends. Moskow anticipates sustained growth with a balanced premium-value portfolio and 21% of sales coming from online platforms. He additionally highlighted the possibility of further margin growth and expressed optimism that the household and personal care products company will reach the upper end of its EPS target.
Terry Smith’s Fundsmith LLP is the largest shareholder in the company, with 6,914,366 shares worth $716.88 million.
6. Hims & Hers Health, Inc. (NYSE:HIMS)
Number of Hedge Fund Investors: 37
A multispecialty telehealth platform called Hims & Hers Health, Inc. (NYSE:HIMS) links patients with certified medical professionals to provide high-quality care for a range of conditions pertaining to primary care, dermatology, mental health, and sexual health, among other areas. In January 2024, the company expanded the scope of its healthcare business segment by introducing in-person healthcare choices to enhance its offerings.
Additionally, the company offers a variety of carefully chosen non-prescription products, such as shampoos, conditioners, scalp scrubs, and topical treatments like minoxidil in the hair care specialty category; melatonin and biotin in the wellness specialty category; and moisturizers, creams, sunscreen, serum, face oil, and face wash in the skincare specialty.
HIMS revealed an outstanding Q2 2024 performance. Revenue of $315.6 million was up by 52% year on year in Q2 2024, as subscribers increased to 1.9 million, up 43% YoY. The firm raises the full-year 2024 sales projection to a range of $1.37 billion to $1.40 billion and the adjusted EBITDA guidance to a range of $140 million to $155 million.
Ryan MacDonald, an analyst at Needham, gave Hims & Hers Health, Inc. (NYSE:HIMS) a Buy recommendation, highlighting the company’s leadership in providing accessible healthcare in the areas of dermatology, mental health, weight reduction, and sexual health. Although the business’s recent entry into the compounded GLP-1 market has increased volatility, MacDonald believes this will fortify the company’s foundation and propel the company toward rapid development. Moreover, he points out that even in the absence of GLP-1 contributions, HIMS is expanding by more than 40% a year and has revenues of over $1 billion. The favorable forecast is supported by the company’s development into more advanced care and tailored goods, which are anticipated as major drivers of future revenue and margin improvement.
5. Ulta Beauty, Inc. (NASDAQ:ULTA)
Number of Hedge Fund Investors: 46
Ulta Beauty, Inc. (NASDAQ:ULTA) is the biggest specialty beauty retailer in the United States as well as one of the “20 Biggest Retail Companies in the US,” with 1,385 shops by the end of the fiscal year 2023 and a collaboration with Target. The company’s products include makeup (41% of sales in 2023), perfumes, skin care (19% of sales), hair care (19% of sales), and bath and body items. Ulta Beauty now sells its products online and offers an array of social media content, tutorials, and tips.
Private-label goods and merchandise from over 500 suppliers are available at Ulta. In every store, it provides salon services such as skin, brow, cosmetic, and hair services.
The majority of Ulta locations are located in suburban strip centers and have an approximate floor area of 10,000 square feet. Ulta is headquartered in Bolingbrook, Illinois, and was established in 1990.
The beauty retailer’s strong reputation has helped it prosper despite adverse external factors and the state of the economy. Ulta opened its first shop ten years ago, and with the help of new brands and products, better marketing, and an expanded loyalty program with over 43 million active members, it became the biggest specialized beauty retailer in the US. Ulta’s sales rose from $912 million in 2007 to $11.2 billion in 2023 as a result of the company opening more than 1,000 locations, improving shop productivity, and growing e-commerce. It is now a sought-after partner for prestige, mass, and up-and-coming beauty companies as a result of its success.
Although the company is subject to fierce competition, product cycles, and innovation in the cosmetics industry, analysts believe that it has built a loyal customer base that has helped it capture market share from mall-based retailers and effectively compete with e-commerce giants like Amazon. They believe that Ulta’s salons, selection, incentives, and service stimulate repeat business and that adolescent girls and women enjoy trying out items in the shop.
In Q2 2024 earnings call, Dave Kimbell, Chief Executive Officer stated that following about the hair care segment;
“And so when there’s pressure on one part of the business, it impacts our whole store. But our mass business is performing well, and we’re confident in our outlook there. As far as the hair dynamics, I mentioned in the remarks, the primary driver. We’re pleased with our hair business. It’s a critical part of our business. I mentioned our salon is performing well. The hair business primary driver of the performance there was a shift in one of our strategic tent pole events in hair from the second quarter into the first quarter. And that was the primary driver of the lower results in that. But our hair business is important, and we continue to find ways to drive that business going forward.”
Warren Buffett’s Berkshire Hathaway is the largest shareholder in the company, with 690,106 shares worth $266.29 million.
