In this article, we will discuss: 10 Best Skincare Stocks to Buy According to Hedge Funds.
According to NielsenIQ, the global beauty market is expected to increase by 7.3% annually to reach $1 trillion in 2025, with Latin America by 19.1% and Africa-Middle East by 27.1% leading the way. Since TikTok Shop is the eighth-largest health and beauty shop in the US and generates around $1 billion in sales, e-commerce now accounts for 41% of US beauty sales. Nevertheless, 43% of customers believe that anti-theft methods like locked shelves discourage them from returning to a store. The fragrance and bath & shower segments drove the US beauty market’s 6.2% sales growth in 2024. Boomers choose product efficacy and anti-aging remedies, while Gen Z stresses skincare and values-driven companies. As a result, brands must implement data-driven generational strategies. To retain customer trust and relevance across changing demographics, successful beauty players will strike a balance between innovation and sustainability, integrating digital and physical shopping, and guaranteeing inclusivity and transparency.
On February 12, 2025, Circana reported that sales in the US beauty industry have increased for the fourth consecutive year. According to the report, mass-market beauty sales rose by 3% in 2024, while prestige beauty sales climbed 7% year over year to $33.9 billion. The fastest-growing prestige category was fragrance, which now accounts for 28% of prestige beauty sales and is the second-largest prestige category with double-digit unit growth and dollar sales up 12%. The growth rates for eau de parfums and parfums were 14% and 43%, respectively. Sales of high-end products surged by 12%, while sales of body sprays and hair fragrances jumped by 94% and 32%.
Specifically, skincare concluded the year as the slowest-growing category in the prestige market, with dollar sales up 2% and units expanding slightly faster—and a modest rise in both metrics in the mass market. Since top-performing masstige brands that are distributed across markets are propelling growth in both, skincare has emerged as the market that is best aligned across mass and prestige. Face cleansers and lip treatments were among the standout categories in the premium market. Body care products, such as lotions, creams, cleansers, and hand soaps, continued to outperform the facial market.
As per Circana’s report, the beauty industry continues to evolve as a result of the “skinification” of beauty, which involves incorporating skincare ingredients into body care, hair care, and makeup products. The first half of 2024 saw a 7% spike in U.S. skincare sales, with unit sales up 10% YoY. Body care and sun care are driving this growth, outpacing facial care as retinoids, AHAs, and vitamin C penetrate into these markets. Furthermore, this innovation drove double-digit growth in makeup sales, driven by serum foundations that give skin benefits and coverage and are packed with niacinamide, hyaluronic acid, and squalane. Hybrid makeup-skincare products are sought after by more than half of American consumers, with 60% of Gen Z and Millennials giving them top priority. Even the haircare industry has adopted skinification; salicylic and glycolic acids are popular for scalp care, and fragrance companies are experimenting with alcohol-free formulas to cater to sensitive skin. Brands must innovate and educate to remain competitive as consumers’ demands for multipurpose, benefit-driven products grow.
Larissa Jensen, global beauty industry advisor at Circana, stated:
“The beauty industry’s resilience continues to shine as consumers turn to beauty to not only look, but also feel good.” “With beauty products intertwined with consumers’ emotional needs and wellness routines, maximizing this opportunity will go a long way to ensure a healthy future for our industry.”
Looking ahead, according to Wendy Nicholson, managing director of Baird, commented:
“Skincare is one area where I think we’ll continue to see breakthroughs.”
She believes that when brands adapt to the change, consumer expenditure on injectibles and other treatments is likely to result in new product development.
With that said, here are the 10 Best Skincare Stocks to Buy According to Hedge Funds.
A photograph of a customer testing out different products in the skincare aisle at a store.
Methodology:
We sifted through holdings of Beauty ETFs and online rankings to form an initial list of 20 skincare stocks. From the resultant dataset, we chose 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 1,009 hedge funds in Q4 2024 to gauge hedge fund sentiment for stocks. We have used the stock’s Revenue Growth Rate (year-over-year) as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Unilever PLC (NYSE:UL)
Number of Hedge Fund Investors: 31
Unilever PLC (NYSE:UL) is included in our list of the Best Beauty Stocks. It focuses on packaged food (34%), homecare (14%), and personal care (52% of total revenues in 2022). Its beauty brands include TRESemmé, Axe and Dove, Sunsilk, Clear, and Vaseline. Furthermore, the business owns renowned skincare brands like Paula’s Choice and Dermalogica.
All five Business Groups contributed to Unilever PLC (NYSE:UL)’s impressive 2024 performance, which included an underlying volume growth of 2.9%. Across all Business Groups except Ice Cream, the gross margin grew by 280 basis points to 45%, exceeding pre-COVID levels. Strong consumer demand was evident in the Beauty & Wellbeing area, which saw a notable 6.5% underlying sales growth powered by a 5.1% volume growth. Moreover, the firm showed its dedication to shareholder returns by repurchasing shares and paying out $62.63 billion in dividends.
By the end of 2024, the company’s productivity initiative had already reduced 4,300 full-time positions, with a goal of 7,500 positions by the end of 2025. The Wellbeing and Prestige segments were the main drivers of North America’s exceptional performance, which included 7% growth and volumes above 6%. Unilever PLC (NYSE:UL)’s cash conversion was robust at 106%, above its long-term aim of roughly 100%, showing high operational effectiveness and cash generation.
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 17.94 million shares worth $1.02 billion as of Q4.
9. e.l.f. Beauty Inc. (NYSE:ELF)
Number of Hedge Fund Investors: 35
The multi-brand beauty company and one of the Best Beauty Stocks, e.l.f. Beauty, Inc. (NYSE:ELF) was a huge success for a large portion of 2024, recording impressive growth and leveraging a new generation of Gen Z consumers who are seeking high-quality products at competitive prices. Younger consumers are especially drawn to the company’s dedication to vegan and cruelty-free products.
The fiscal second quarter of 2025 saw a 31% YoY growth in revenue, and the business recorded gains in market share and sales for the 24th consecutive quarter. Although e.l.f. Beauty, Inc. (NYSE:ELF) spends much on marketing and digital costs, along with some other operating expenses, it also has high gross margins. Most importantly, e.l.f. Skin continued to outperform the category, becoming a top ten skincare brand, and the acquisition of Naturium boosted their skincare penetration to 18% of total retail sales.
e.l.f. Beauty, Inc. (NYSE:ELF) has an excellent market position and room to grow. The management team of the company has effectively distinguished the brand through client loyalty, market share capture, and innovation. Management is hopeful about future gains brought about by improvements to shelf space and improved marketing activities, despite recent earnings showing some shortcomings due to high year-over-year comparisons and underperforming new products. Furthermore, there are a lot of growth prospects for the business, especially in international markets and skincare.
Polen US Small Company Growth Strategy maintained strong confidence in e.l.f. Beauty Inc.’s (NYSE:ELF) long-term growth potential and market share expansion. It stated the following in its Q3 2024 investor letter:
“The Portfolio’s top detractors were Progyny, elf Beauty, and Alarm.com. E.l.f. Beauty, Inc. (NYSE:ELF), a discount beauty company focused on cosmetics and skincare, is a new addition to the Portfolio this quarter. Please see Portfolio Activity below for further detail. We are intrigued by the company’s impressive track record for growth, margins, and returns on capital. While elf has reported significant results all year, shares came under pressure, in our view, as short-term investors primarily appeared to anticipate a slowdown in revenue growth, possibly due to investor concerns of market saturation, economic conditions, and valuation concerns, among other factors. While we are confident in how we underwrote our initial investment for returns above the portfolio average, the stock has come under even more pressure than we anticipated. We used this weakness to add to our position. We’re intrigued by the strength elf has experienced across its retailer and ecommerce channels, particularly in taking market share in a challenging consumer environment, given their relatively inexpensive prices vs. competitors.
elf Beauty, described above, is a discount beauty company focused on cosmetics and skincare. We find the company’s reputation for quality, innovation, and prices below mass cosmetics brands to be uniquely positioned. While this combination of innovation, quality, and value has led to compelling growth, we still believe it’s early days for the company. elf’s brand awareness is significantly less than that of more prominent players; it is still adding shelf space, expanding its product portfolio, and entering the skincare market. elf is also still a US-focused business, with some early signs of international success. The company’s financial profile is strong, and we expect EPS to grow by 25% over the long term.”
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.
7. Kenvue Inc. (NYSE:KVUE)
Number of Hedge Fund Investors: 38
Revenue Growth Rate (year-over-year): 0.07%
Kenvue Inc. (NYSE:KVUE) is among the Best Beauty Stocks and the world’s largest pure-play consumer health company by revenue, with $15 billion in annual revenue. The company operates through three segments: Self Care, Skin Health and Beauty, and Essential Health. Formerly Johnson & Johnson’s consumer division, the company spun out and went public in May 2023. Given its ability to use funds and make investments as a stand-alone company, analysts expect Kenvue to prioritize expanding its 15 priority brands, which include Tylenol, Nicorette, Listerine, and Zyrtec, to fuel future growth.
Strong productivity improvements helped Kenvue Inc. (NYSE:KVUE) achieve a 200 basis point increase in adjusted gross margin in Q4 2024, bringing it to 60.4%. Furthermore, the business raised its overall brand investment by about 20%, increasing its advertising spend from 8.7% of sales in 2024 to 10.6% of sales in 2024. Nearly 80% of brands, including well-known names like Tylenol, Zyrtec, and Nicorette, increased their market share in the self-care segment.
Most importantly, volume-led growth was achieved by the skin health and beauty segment, which performed exceptionally well in Latin America and EMEA. Further improving operational efficiency is Kenvue Inc. (NYSE:KVUE)’s “View Forward” effort, which is on track to generate $350 million in annualized savings by 2026 with notable cost reductions throughout its infrastructure.
In 2025, the firm intends to introduce 40% more innovations, and the company anticipates that stronger brand investments, better distribution, and active trade and marketing campaigns will boost revenue growth in the second half of the year.
6. Hims & Hers Health Inc. (NYSE:HIMS)
Number of Hedge Fund Investors: 38
Revenue Growth Rate (year-over-year): 69.32%
Hims & Hers Health, Inc. (NYSE:HIMS) is a multi-specialty telehealth platform that connects customers with certified healthcare providers, allowing them to receive high-quality medical care for a variety of conditions related to mental health, sexual health, dermatology, haircare, and more.
In 2024, Hims & Hers Health, Inc. (NYSE:HIMS) had historic sales growth, with Q4 revenue of $481 million and full-year revenue of $1.5 billion, which represents 95% and 69% year-over-year increases, respectively. Over 55% of users subscribed to at least one personalized solution, and the total number of members surpassed 2.2 million, up 45% from the previous year. Growth was driven by the expansion of tailored treatments; women’s dermatology subscribers more than doubled, and men’s dermatology subscribers jumped more than 55% annually. Furthermore, the company reported $26 million in net profits for the fourth quarter and $126 million for the entire year, marking its first full year of GAAP profitability.
Hims & Hers Health, Inc. (NYSE:HIMS) also showed strong cash flow generation, generating around $60 million in free cash flow in the fourth quarter and about $200 million for the year. The company strengthened its position in personalized healthcare services by completing acquisitions of a peptide facility and whole-body lab testing facilities to further improve personalization and innovation.
Its non-linear development trajectory is further proven by two recent acquisitions. The purchase of a California peptide lab places Hims & Hers Health, Inc. (NYSE:HIMS) at the vanguard of metabolic optimization, cognitive performance, and anti-aging therapies, while the at-home full-body testing business offers avenues for hormone therapy, precision medicine, and more comprehensive preventative healthcare. These calculated actions support the firm’s goal of adding new verticals to its current infrastructure at a little expense to generate enormous long-term value.
5. The Estée Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Investors: 45
The Estée Lauder Companies Inc. (NYSE:EL) is a staple of the industry, historically one of the top performers and Best Beauty Stocks to consider. Although the company was founded in the postwar era, it has since developed into a dominant force in the market with a variety of appealing brands. Among its brands are Aveda, Bumble & Bumble, and La Mer. Although the company’s luxury skincare products have found a thriving market, it has recently had to reduce its dividend due to a slowdown in China.
In Q2 of 2025, Skin care segment net sales dropped 12% YoY as a result of weakening travel and Asia/Pacific retail, with Estee Lauder and La Mer experiencing drops as a result of dampened Chinese consumer sentiment. Although it was somewhat compensated by lower expenditures and stricter spending control, the operating income also dropped.
Nonetheless, The Estée Lauder Companies Inc. (NYSE:EL) revealed its revolutionary strategic strategy, “Beauty Reimagined,” which focuses on greater agility and improved consumer focus to restore sustainable sales growth and achieve strong double-digit adjusted operating margins over the coming years. Over 60% of the company’s fiscal 2025 goals have already been met in the first half of the year due to the Profit Recovery and Growth Plan, which has been expanded to address new issues and improve operational effectiveness.
The Estée Lauder Companies Inc. (NYSE:EL) is also growing its investments in consumer-facing initiatives, such as more visible advertising and better-targeted marketing campaigns, and tripling the proportion of innovation introduced in a year. Significant gains in market share have also been fueled by successful brand launches and expansions, such as Clinique and The Ordinary’s entry into Amazon’s U.S. Premium Beauty stores. The firm is incorporating AI into several operations, such as marketing optimization and demand forecasting, to improve decision-making and expedite procedures.
4. Ulta Beauty Inc. (NASDAQ:ULTA)
Number of Hedge Fund Investors: 47
Ulta Beauty, Inc. (NASDAQ:ULTA), one of the Best Beauty Stocks, offers a remarkable opportunity in the skincare industry. The company operates storefronts in strip malls all around the country, where it offers beauty items. The company’s hair salons, which also serve to attract clients to the stores, give it an edge over other physical retailers and beauty merchants like Sephora.
The business has continuously raised comparable sales throughout the years, and its stock has continuously done well. However, the company faced competition from mass-market retailers like Kohl’s and CVS, making 2024 a challenging year. Ulta Beauty, Inc. (NASDAQ:ULTA) also signed a deal with Target to open 100 stores within Target stores in the upcoming years as part of its commercial expansion. Notwithstanding its recent difficulties, it still enjoys several competitive advantages, including its supermarket retail format, reward program, wide selection, and hair salons.
The opening of new stores was primarily responsible for Ulta Beauty’s (NASDAQ:ULTA) 1.7% year-over-year growth in third-quarter fiscal 2024 net sales of $2.53 billion, which was partially offset by a decline in other revenue. Comparable sales increased by 0.6% as a result of a 0.1% increase in average ticket size and a 0.5% increase in transactions. Operating income was $318.5 million, or 12.6% of net sales, despite higher SG&A expenses. Net income reached $242.2 million, while diluted earnings per share rose from $5.07 to $5.14.
The company continued to grow, adding 57 new locations in 2024 and repurchasing $764.5 million worth of shares, showing confidence in its long-term growth strategy. Ulta Beauty, Inc. (NASDAQ:ULTA) seems to be headed for more growth because of its distinctive business strategy.
3. Bath & Body Works, Inc. (NYSE:BBWI)
Number of Hedge Fund Holders: 57
Bath & Body Works, Inc. (NYSE:BBWI) is a company that manufactures scented personal care products and specialized home fragrances under the brand names White Barn, C.O. Bigelow, and Bath & Body Works. It is an established business among consumers seeking fragrances, skincare, personal care creams and soaps, candles, air fresheners, house fragrances, and other flavoring items. In addition to 1,850 locations in North America, the top personal care and home fragrance brand has 480 franchises internationally.
Bath & Body Works, Inc. (NYSE:BBWI) had record-breaking growth in loyalty memberships in 2024, with active membership rising 6% annually and loyalty customers accounting for 80% of sales. These consumers continue to spend more and shop across channels more frequently than non-members. The firm exceeded initial goals by delivering $155 million in incremental cost reductions through its Fuel for Growth program throughout the year, bringing the two-year total to over $300 million. The company’s diluted EPS of $2.09 was above forecasts, and its Q4 net sales of $2.8 billion exceeded the high end of guidance.
The Everyday Luxuries brand, inspired by prestige scents, appealed to a younger and more diversified customer base. Record-high retention rates can be attributed to improvements in the customer experience, as seen by the fact that 57% of North American stores are now located outside of malls. Last but not least, a 20% growth in areas not impacted by the Middle East crisis drove a roughly 10% increase in foreign retail sales.
Baird maintained its Outperform rating on Bath & Body Works, Inc. (NYSE:BBWI) shares and increased the company’s price target from $45 to $47. The company stated that the quarter exhibited a strong holiday season and that there is potential for improvement in the guidance. According to Baird, they would purchase the shares in the event of a decline.
2. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Investors: 62
One of the Best Beauty Stocks, Colgate-Palmolive Company (NYSE:CL), was established in 1806 and has since expanded to become a major force in the home and personal care industries. The company manufactures skincare products such as sunscreens. Moreover, the firm manufactures shampoos, shower gels, deodorants, and other homecare products that are delivered to more than 200 countries in addition to its renowned dental care line, which accounts for more than 40% of its total sales. Sales overseas account for about 70% of its total revenue, with developing countries accounting for 45% of this total.
In 2018, Colgate-Palmolive Company (NYSE:CL) began acquiring Filorga®, EltaMD®, and PCA SKIN® brands with the goal of creating a world-class, professionally recognized, and scientifically validated skin health company.
In 2024, Colgate-Palmolive Company (NYSE:CL) achieved net sales of over $20 billion for the first time, with organic sales growth of 7.4% across all product categories and divisions. The EPS of the business grew by double digits. While maintaining its global leadership in toothpaste (41.4% market share) and manual toothbrushes (32.2%), the company increased its gross profit margins. Operating cash flow was $4.1 billion, up 10% year over year, and was utilized to distribute $3.4 billion in dividends and stock buybacks to shareholders. The corporation raised marketing spending by 15% after growing it by 19% in 2023, showing the power and inventiveness of its brand.
Despite currency headwinds and the anticipated exit from private-label pet nutrition, Colgate-Palmolive Company (NYSE:CL) is still poised to sustain EPS growth in 2025 due to its high profit margins, strict cost control, and ongoing developments in digital and analytics.
1. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Investors: 79
Procter & Gamble Company (NYSE:PG) is the Best Beauty Stock and has become one of the world’s largest consumer product manufacturers. Sales outside of the company’s home market (the United States) account for more than half of its total sales. The beauty division of the Cincinnati-based company includes renowned skin and personal care brands like Olay, Old Spice, Safeguard, Secret, SK-II, and Native, and hair care brands like Head & Shoulders, Herbal Essences, Pantene, and Rejoice, which accounted for 18% of the company’s net sales in 2024, excluding the corporate segment.
In the second quarter of FY25, Procter & Gamble (NYSE:PG) reported net sales of $21.9 billion, up by 2% year over year. The gain in organic sales was 3%. While Personal Care’s double-digit growth was driven by innovation and volume gains, Hair Care’s expansion in North America, Europe, and Latin America contributed to the Beauty segment’s organic sales rising by 2% YoY. Despite the popularity of the premium SK-II brand, Skin Care suffered a mid-single-digit loss due to decreasing volume.
Procter & Gamble Company (NYSE:PG)’s strategic aims, which include marketing and product innovation expenditures to support its portfolio of everyday, essential items, should ensure that its brands retain influence over consumers and retailers, thereby maintaining its broad moat over time.
Stifel increased the firm’s price target from $161 to $165. The company reports that after “solid” fiscal Q2 performance and the restatement of full-year guidance, its FY25-FY26 EPS expectations are mostly unchanged.
Overall, Procter & Gamble Company (NYSE:PG) ranks first on our list of the 10 Best Skincare Stocks to Buy According to Hedge Funds. While we acknowledge the potential for PG to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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