10 Best Skincare Stocks to Buy According to Hedge Funds

8. Sally Beauty Holdings Inc. (NYSE:SBH)

Number of Hedge Fund Investors: 36

One of the Best Beauty Stocks, Sally Beauty Holdings, Inc. (NYSE:SBH) is a U.S.-based professional retailer of beauty products. Sally Beauty operates in the United States, Puerto Rico, the United Kingdom, Belgium, Canada, Chile, Mexico, Peru, France, Ireland, Spain, Germany, and the Netherlands. Sally Beauty Supply and Beauty Systems Group are the company’s two business divisions. Among the products offered are nailcare, skincare, hair dryers, hair styling tools, and hair color and care products.

In Q1 of 2025, Sally Beauty Holdings, Inc. (NYSE:SBH) reported its third consecutive quarter of positive sales growth, with consolidated net sales of $938 million, up 0.7% year on year, driven by advances in both the Sally and BSG segments. The adjusted diluted EPS rose by 10% to $0.43, and the adjusted operating margin improved by 50 basis points to 8.4%. About $11 million in pretax benefits were provided by the company’s Fuel for Growth program, which aided in SG&A efficiency and gross margin growth. E-commerce sales worldwide grew by 9% YoY to $99 million, or 11% of total net sales.

To further expand its product line and premium positioning, the BSG segment also announced the April 1 launch of the premium hair care brand K18 in all U.S. and Canadian retail locations as well as online.

Meridian Hedged Equity Fund stated the following regarding Sally Beauty Holdings, Inc. (NYSE:SBH) in its Q3 2024 investor letter:

“Sally Beauty Holdings, Inc. (NYSE:SBH) is a leading international specialty retailer and distributor of professional beauty supplies, operating in two segments: retail consumers and licensed salon professionals

We own the company due to its strong free cash flow generation, attractive valuation, and the potential for long-term growth in the professional beauty products market. While the company faces headwinds from a value-conscious consumer base, its focus on DIY care provides resilience. In the third quarter, the company exceeded expectations, driven by increased sales and effective performance marketing in its retail segment, which boosted new customer acquisition and reactivated lapsed customers. We continue to hold the company in the Fund.”

Ken Fisher’s Fisher Asset Management was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q4 2024. It owns 2.50 million shares worth $26.21 million as of Q4.