In this article, we will discuss: 12 Best Beauty Stocks to Buy According to Hedge Funds.
According to a report by McKinsey, in 2023, the global beauty market expanded by 10%, reaching $446 billion in retail sales, mostly due to price hikes rather than volume advances. North America and Europe grew steadily, but the Middle East & Africa (18%) and Latin America (17%) grew at the quickest rates, with China trailing behind at 3% because of poor consumer sentiment. The market is expected to reach $590 billion by 2028 at a compound annual growth rate (CAGR) of 6%, with growing markets and Asia-Pacific driving development. Skincare (44% of the market) had stable growth, while fragrance (14%) was the category with the quickest rate of growth, driven by luxury niche brands. Beauty businesses must employ premiumization, innovation, and skin care-infused cosmetics to transition from price-driven to volume-driven growth to maintain momentum, especially in high-growing markets like the Middle East and India.
A significant contributor to the American economy, the beauty industry generated $94.36 billion in sales in 2023 and employed 4.6 million people in manufacturing, retail, and distribution. Costs increased by 6.5% due to inflation, which affected customer spending patterns and raised demand for reasonably priced “dupes.” In 2023, e-commerce beauty sales reached $21.3 billion, a reflection of changing consumer preferences. Despite economic downturns, consumers continue to make little luxury purchases, a phenomenon known as the “lipstick effect.” Private equity investors show their confidence in the potential of the beauty industry by continuing to invest in scalable beauty brands. Disruptions in the supply chain have pushed up near-shoring initiatives, which have helped create jobs in the United States. DC Advisory states that “the beauty sector’s adaptability ensures long-term relevance and economic impact.”
Recently, as the holiday season approached, the U.S. beauty business was still doing well, with mass market sales up 2% year over year and the prestige market expanding 7% to $22.8 billion, according to Circana. Lipcare sales increased 21% in dollars and 23% in units, due to high demand for tinted balms and oils. As a result of consumers’ price sensitivity, mid-range skincare brands are expanding six times faster than luxury skincare. Sales of fragrances surged 14%, with premium brands up 15%, while prestige hair care climbed 8%, driven by style and scalp care items. According to 29% of customers, the Christmas season is a critical time to purchase beauty presents. Larissa Jensen, global beauty industry advisor at Circana stated:
“Prestige beauty epitomizes the indulgence in little luxuries and acts as an indicator of the consumer mindset for the beauty industry overall,” “This holiday season, its resiliency will be tested. There has been some pullback in spending throughout 2024, but big increases in prestige beauty spend from higher-income households with children under 18-years-old indicate parents are indulging Gen Alpha with these products. The social media virality of this new generation of beauty enthusiasts shows no sign of slowing and could be a pivotal holiday growth driver.”
The increasing integration of artificial intelligence (AI) appears to have affected every business, and the beauty industry is no different. AI is already changing the way beauty brands function, and its impact is only going to increase. According to a survey by Perfect Corp., 77% of experts in the beauty industry think that conversational AI agents—like chatbots and virtual assistants—offer unparalleled possibilities for customizing encounters. These tools enable accurate answers to questions, individualized product recommendations, and immediate, round-the-clock customer support.
With that said, here are the 12 Best Beauty Stocks to Buy According to Hedge Funds.
A female customer shopping for beauty products in a modern store.
Methodology:
We sifted through holdings of beauty ETFs and online rankings to form an initial list of 20 beauty stocks. From the resultant dataset, we chose 12 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 900 hedge funds in Q3 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 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
12. Coty Inc. (NYSE:COTY)
Number of Hedge Fund Holders: 26
One of the Best Beauty Stocks, Coty Inc. (NYSE:COTY) concentrates mostly on color cosmetics (28%) and fragrances (59%), with limited exposure to skincare (5%) and body care (5% of sales). The company’s consumer cosmetics business is centered on acquired mass brands, including Rimmel, CoverGirl, Max Factor, Sally Hansen, and Bourjois; for its fragrance business, it licenses luxury and high-end labels like Gucci, Burberry, Hugo Boss, Davidoff, and Calvin Klein.
Approximately 42% of the beauty company’s sales come from the Americas, 14% from Asia-Pacific, and nearly 44% from Europe. The majority of the stake is held by the German investment group JAB.
Over the past three years, Coty Inc. (NYSE:COTY)’s net revenue has risen consistently as a result of growth in both revenue streams and expansions in profitability margins. In the US, both the mass market and premium beauty channels grew in 2023, but the prestige channel grew more quickly than the mass market channel. To capitalize on this trend, Coty is focusing on its prestige segment by entering the market for prestige cosmetics and building a solid portfolio, such as strategic partnerships with Kim Kardashian and Kylie Jenner.
In Q1 of 2025, the revenue grew by 2% YoY, fueled by growth in prestige fragrances, outperforming the beauty market. Growth is still being driven by Coty Inc. (NYSE:COTY)’s online sales in the first quarter of 2025, with CoverGirl and Rimmel seeing remarkable rises of 40% and 80%, respectively. In Q1, the Prestige segment experienced a 7% growth, caused mostly by the fragrance category. Furthermore, the company has improved its EBITDA margin to around 19%, a gain of 250 basis points over the last three to four years, showing its tremendous progress in margin expansion. The beauty firm is still committed to deleveraging, with the goal of having 2.5x leverage by the end of 2024 and ending the year with less than 3x. The company has also increased its cost-cutting goal to $120 million, focusing on AI-driven demand planning and supply chain efficiency.
Steve Cohen’s Point72 Asset Management was the largest stakeholder in Coty Inc. (NYSE:COTY) among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 3.37 million shares worth $31.62 million as of Q3.
11. Sally Beauty Holdings Inc. (NYSE:SBH)
Number of Hedge Fund Holders: 28
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 nail care, skin care, hair dryers, hair styling tools, and hair color and care products.
Sally Beauty Holdings, Inc. (NYSE:SBH)’s FY24 financial results were impressive, with net sales of $3.7 billion, a gross margin of 51%, and adjusted operating income of $315 million. Comparable sales increased 2%, while Q4 net sales were up 1.5% to $935 million, with an adjusted operating margin of 9.4% ToY. Performance marketing, product innovation, and the growth of digital marketplaces on Amazon, DoorDash, Instacart, and Walmart helped the company achieve four consecutive quarters of positive comp sales in BSG and two in Sally Beauty. Senior note refinancing, ABL repayment, and $60 million in share repurchases all helped to reduce net debt leverage to 2x.
More than 60 colorists drove 33% higher order values, highlighting the widespread use of the Licensed Colorist OnDemand service. In addition, Happy Beauty Co. will improve data-driven expansion tactics by opening ten new pilot stores before Black Friday.
Oliver Chen, a TD Cowen analyst, increased Sally Beauty Holdings, Inc. (NYSE:SBH) price target from $13 to $14. The company values the momentum created by product innovation, the SBS brand update, the Studio by Sally Happy Beauty marketplace, and the growth of both new and existing customers.
Ken Griffin’s Citadel Investment Group was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 2.68 million shares worth $36.34 million as of Q3.
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.”
10. Hims & Hers Health Inc. (NYSE:HIMS)
Number of Hedge Fund Holders: 31
Hims & Hers Health, Inc. (NYSE:HIMS) is a multi-specialty telehealth platform that connects customers with certified healthcare providers. It allows them to receive high-quality medical care for various conditions such as mental health, sexual health, dermatology, primary care, and more. Beauty products sold by the company include face cleansers, moisturizers, lotions, and sunscreen.
Hims & Hers Health, Inc. (NYSE:HIMS)’s business strategy is focused on recurring, subscription-based revenue, with more than 90% of its revenue coming from consumers who pay every month for ongoing treatment.
In Q3 of 2024, Hims & Hers Health, Inc. (NYSE:HIMS)’s revenue jumped by 77% year over year to surpass $400 million, setting a new revenue growth record. The overall number of subscribers reached over 2 million, a 44% increase from the previous year, due to a strong subscriber growth of over 180,000 net new additions. Consumer desire for customized offerings is further evidenced by the fact that 65% of new customers choose personalized solutions.
At four weeks, 85% of GLP-1 patients were still actively participating, and at twelve weeks, 70% of them were still subscribers. Adjusted EBITDA increased 4 times year over year to $51.1 million, indicating a nearly 13% adjusted EBITDA margin, showing remarkable financial performance. By repurchasing 1.9 million shares for $30 million, the firm also showed strategic capital allocation and displayed confidence in the basic value of its stock.
Piper Sandler increased the price target for Hims & Hers Health, Inc. (NYSE:HIMS) to $24 from $21. As the year begins, the firm is keeping an eye on how rates and lending rules will affect all of its covered areas. It is also keeping an eye on how the incoming government will affect taxes, possible tariffs, and appointee views. Piper feels fine paying a slightly higher price if the fundamentals are in line, but he thinks it’s wise to prioritize GARP and value with an increased focus on fundamentals.
9. Bath & Body Works Inc. (NYSE:BBWI)
Number of Hedge Fund Holders: 36
One of the Best Beauty Stocks, Bath & Body Works, Inc. (NYSE:BBWI) is a business of scented personal care products and specialized home fragrances that goes by the names White Barn, C.O. Bigelow, and Bath & Body Works. It is an established business among consumers seeking fragrances, personal care creams and soaps, candles, air fresheners, house fragrances, and other flavoring items. The leading brand in personal care and home fragrance has 480 franchises internationally, in addition to 1,850 outlets in North America.
Third-quarter 2024 net sales for Bath & Body Works, Inc. (NYSE:BBWI) were $1.61 billion, up by 3% YoY from $1.56 billion in Q3 2023. Its targeted implementation of the five E strategy and strategic investments are driving the business toward long-term, profitable growth. Elevating the company’s brand and core products, interacting creatively with its core clientele, expanding into new markets and adjacent areas, improving the omnichannel experience, and boosting operational excellence and efficiency are the five E’s of its strategy. In fiscal quarter three of 2024, it made progress in each of these areas.
In Q3 of 2024, Bath & Body Works, Inc. (NYSE:BBWI)’s $0.49 earnings per diluted share were above the company’s forecast. Net income was $106 million, while operating income was $218 million, up from $221 million the previous year. Adjusted earnings per share increased to $0.48 after excluding a one-time gain in 2023. The company raised its projection for fiscal year 2024, predicting a 1.7% to 2.5% fall in full-year net sales and an adjusted EPS of $3.15 to $3.28. A calendar shift is anticipated to cause net sales to drop 4.5% to 6.5% in Q4 2024, with an expected EPS of $1.94 to $2.07. Strong innovation, marketing expenditures, and a dynamic U.S.-based supply chain were highlighted by CEO Gina Boswell as the main sources of momentum as the holiday season approached.
Another priority for Bath & Body Works, Inc. (NYSE:BBWI) is store expansion. The conclusion of fiscal Q3 2024 saw the opening of its 500th overseas location in London. Its partner store openings for the year are on schedule, with approximately 50 net new stores.
The price objective for Bath & Body Works, Inc. (NYSE:BBWI) was increased by Wells Fargo from $32 to $38. Although Bath & Body Works’ inflection is finally beginning to take shape, the company claims that the improved top line comes at the sacrifice of margin. Wells continues, “All in, better than feared with numbers going up, but the debate probably carries on.”
8. Spectrum Brands Holdings Inc. (NYSE:SPB)
Number of Hedge Fund Holders: 37
One of the Best Beauty Stocks, Spectrum Brands Holdings, Inc. (NYSE:SPB) is a firm that sells consumer products and household necessities. The business supplies consumer batteries, locksets for homes, hardware for home builders, grooming supplies, and personal care items. The company oversees operations in three product-focused segments: home and garden, global pet care, and home and personal care. North America, Europe, the Middle East and Africa, Latin America, and Asia-Pacific are the regions where the company manufactures, markets, and distributes its goods.
In fiscal Q4 2024, Spectrum Brands Holdings, Inc. (NYSE:SPB) achieved a revenue increase of 4.46% YoY as a result of its ongoing business investments. Despite an additional $62 million spent on R&D, marketing, and advertising, the company produced impressive results in fiscal 2024, with adjusted EBITDA growing by more than 20%.
After finishing the year with net leverage below 0.6 turns, the balance sheet showed tremendous strength, enabling future expansion. Spectrum Brands Holdings, Inc. (NYSE:SPB) increased its quarterly dividend by 12% to $0.47 per share, showing confidence in its projections. As consumers shifted to online shopping, e-commerce sales became a major growth engine.
Net sales for the Home & Personal Care (HPC) division grew 4.1% year over year, with a 5.4% increase in organic net sales after deducting a $4.4 million negative foreign exchange impact. Both the Home and Personal Care categories witnessed mid-single-digit growth, which drove the increase in organic net sales. Increased promotional activity contributed to higher sales volumes in all categories.
Brian McNamara, a Canaccord analyst, increased the firm’s price objective for Spectrum Brands Holdings, Inc. (NYSE:SPB) from $91 to $94. Sales were almost 4% higher than expected, while profitability metrics fell short, according to the company’s mixed Q4 of 2024 results.
7. Ulta Beauty Inc. (NASDAQ:ULTA)
Number of Hedge Fund Holders: 40
Revenue Growth Rate (year-over-year): 9.78%
Ulta Beauty, Inc. (NASDAQ:ULTA) presents an exceptional chance in the cosmetics industry. The company sells beauty items through stores located in strip malls across the country. The company has an advantage over other brick-and-mortar retailers and other beauty retailers like Sephora because of its hair salons, which also help draw customers into the stores.
Over the years, the company has consistently increased comparable sales and its stock has consistently performed well. However, 2024 was a difficult year for the company since it had to deal with competition from mass-market retailers like Kohl’s and CVS. In order to expand its business, Ulta Beauty, Inc. (NASDAQ:ULTA) also signed a contract with Target to open 100 stores inside Target locations over the coming years. It continues to benefit from many competitive advantages, such as its superstore retail model, reward program, extensive variety, and hair salons, despite its recent challenges.
The third-quarter fiscal 2024 net sales of Ulta Beauty (NASDAQ:ULTA) were $2.53 billion, up 1.7% year over year, mostly due to the opening of new stores, however, this was partly offset by a drop in other revenue. A 0.1% increase in average ticket size and a 0.5% increase in transactions led to a 0.6% growth in comparable sales. Even with increased SG&A costs, operating income was $318.5 million, or 12.6% of net sales. Diluted EPS increased from $5.07 to $5.14, while net income hit $242.2 million.
New store contributions and other revenue growth generated a 2% increase in net sales to $7.8 billion for the first nine months. The company displayed confidence in its long-term growth strategy by continuing to expand, adding 57 new stores in 2024, and repurchasing $764.5 million worth of shares. Ulta Beauty, Inc. (NASDAQ:ULTA) appears to be on track for more expansion, given the company’s unique business model.
Ken Griffin’s Citadel Investment Group was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 623,500 shares worth $242.62 million as of Q3.
6. e.l.f. Beauty Inc. (NYSE:ELF)
Number of Hedge Fund Holders: 40
Revenue Growth Rate (year-over-year): 76.89%
The multi-brand beauty company and one of the Best Beauty Stocks, e.l.f. Beauty, Inc. (NYSE:ELF) sells cruelty-free, vegan, clean, accessible, and inclusive cosmetics and skin care items. The company’s goal is for every eye, lip, face, and skin concern to have access to the best of beauty. Through its retail locations and online platforms, the company sells cosmetic accessories for women, such as eyeliner, mascara, false eyelashes, lipstick, face foundation, moisturizer, cleanser, and other supplies. The company sells products under the trademarks e.l.f. Cosmetics, W3LL PEOPLE, and Keys Soulcare. It sells both domestically and internationally, with the United States accounting for the majority of its revenue.
e.l.f. Beauty, Inc. (NYSE:ELF) was a huge success for a large portion of 2024, recording impressive growth and engaging Gen Z consumers seeking high-quality products at competitive prices. The company’s commitment to vegan and cruelty-free products appeals to the younger generation.
The company exceeded forecasts in the fiscal second quarter of 2025, with a 40% increase in revenue fueled by global expansion and online sales. The firm recorded gains in market share and sales for the 23rd straight quarter. Although e.l.f. Beauty, Inc. (NYSE:ELF) spends much on marketing and digital costs, along with some other operating expenses, it nevertheless has wide gross margins.
e.l.f. Beauty, Inc. (NYSE:ELF) secured the top spot in terms of unit share in the mass cosmetics industry in the United States after gaining 195 basis points in market share. Sales abroad increased by 91% YoY, and in Germany’s 1,600 Rossmann stores, the business emerged as the leading cosmetics brand. While the Beauty Squad loyalty program grew by 30% to reach 5.3 million members, digital engagement increased by over 40% year over year. The company increased its FY25 target to 28%-30% net sales growth, citing its excellent performance.
Ken Griffin’s Citadel Investment Group was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 769,200 shares worth $83.87 million as of Q3.
Polen U.S. Small Company Growth Strategy stated the following regarding E.l.f. Beauty, Inc. (NYSE:ELF) 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.”
5. Kenvue Inc. (NYSE:KVUE)
Number of Hedge Fund Holders: 46
One of the Best Beauty Stocks, Kenvue Inc. (NYSE:KVUE) is 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.
The company, formerly the consumer division of Johnson & Johnson, spun out and went public in May 2023. Analysts anticipate that Kenvue would prioritize expanding its 15 priority brands—including Tylenol, Nicorette, Listerine, and Zyrtec—to fuel future growth, given its ability to use funds and make investments as a stand-alone company.
Many of the most well-known brands in the industry are included in its portfolio, including Johnson’s, Neutrogena, Listerine, Tylenol, and Aveeno. A number of the firm’s brands are the global leaders in their respective segments because of their tremendous brand power, despite operating in a fragmented business with fierce competition and constantly shifting customer tastes.
The Self Care division of Kenvue Inc. (NYSE:KVUE) maintained its market share gain in Q3 2024, showing broad-based growth bolstered by 2.5% value realization through carry-over pricing measures. Volume decreased, though, which was somewhat countered by increases in Essential Health. Although demand was still low, Skin Health & Beauty observed early signs of recovery, which affected overall performance. Value realization was increased by pricing changes, while volume weakness had an adverse effect. Despite these obstacles, the firm is nevertheless dedicated to long-term, profitable growth, using its Vue Forward strategy to improve its market position through efficiency measures and brand reinvestments.
Natixis Global Asset Management’s Harris Associates was the largest stakeholder in the company from among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 31.46 million shares worth $727.66 million as of Q3.
4. Estée Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Holders: 49
One of the Best Beauty Stocks, Estée Lauder Companies Inc. (NYSE:EL) is the top supplier of high-end beauty products. The company has maintained its preferred vendor status on both physical and digital platforms and strengthened its competitive position with market-leading brands in skin care, cosmetics, and fragrances. Skincare accounts for 51% of the company’s Q2 2024 sales, followed by makeup (29%), fragrance (16%), and hair care (4%). The revenue of the beauty behemoth, which operates in over 150 countries, is split as follows: The Americas account for 30%, Europe, the Middle East, and Africa (including retail travel) for 39%, and Asia-Pacific for 31%.
Estée Lauder Companies Inc. (NYSE:EL)’s brands include La Mer, Bumble & Bumble, and Aveda. The company has found an expanding customer base for its high-end skincare products, but it has recently battled with a slowdown in China, forcing it to cut its dividend.
In Q1 of 2025, Clinique’s net sales rose by double digits globally, with growth across all regions. The company benefited from continued strength in the lip subcategory, led by the Clinique Pop and Almost Lipstick product franchises, and new product innovation. Additionally, Estée Lauder Companies Inc. (NYSE:EL) launched in Amazon’s U.S. Premium Beauty store in the third quarter of 2024.
Le Labo’s net sales rose by double digits, mostly due to the Classic Collection’s ongoing popularity and the yearly City Exclusive event, which also featured new product innovation. The company also profited from targeted improved consumer reach, including direct-to-consumer, worldwide.
Estée Lauder Companies Inc. (NYSE:EL) achieved a 200-point increase in market share in a single quarter, gaining market share in prestige beauty in Mainland China and becoming the top fragrance company in Japan. In the first quarter of fiscal 2025, the company’s retail sales increased by double digits, which led to gains in the share of prestige beauty over the previous year.
D. E. Shaw’s D E Shaw was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 3.43 million shares worth $341.49 million as of Q3.
Appleseed Fund stated the following regarding The Estée Lauder Companies Inc. (NYSE:EL) in its Q3 2024 investor letter:
“Appleseed Fund added four new names to the portfolio in the past six months: The Estée Lauder Companies Inc. (NYSE:EL), Willis Lease Finance (WLFC), Diana Shipping (DSX) and Gravity (GRVY). Estée Lauder is one of the world’s largest producers of cosmetics products, and valuation has become very attractive as this premier beauty company is suffering from a post-COVID-19 hangover.”
3. International Flavors & Fragrances Inc. (NYSE:IFF)
Number of Hedge Fund Holders: 52
One of the Best Beauty Stocks and top makers of fragrances worldwide, International Flavors & Fragrances Inc. (NYSE:IFF) is also the largest producer of specialty ingredients globally.
International Flavors & Fragrances Inc. (NYSE:IFF)’s Q3 2024 sales increased 4% year on year to $2.93 billion, owing to broad-based volume recovery across all business areas, backed by market stabilization and strong client demand. Revenue increased 9% on a currency-neutral basis, with double-digit increases in Scent (+10%) and Health & Biosciences (+12%), and high-single-digit growth in Nourish (+7%) and Pharma Solutions (+8%). Adjusted operating EBITDA increased 16% to $568 million as a result of cost reductions and productivity improvements.
International Flavors & Fragrances Inc. (NYSE:IFF) witnessed a double-digit increase in the Nourish area, which accounted for more than half of sales ($1.49 billion), while Functional Ingredients saw high-single-digit volume growth, which was somewhat offset by price changes. At $206 million, Nourish’s adjusted EBITDA increased 18%, with a 13.9% margin. The double-digit rise in Consumer and Fine Fragrances helped the Scent segment post $613 million in revenues, which resulted in a 7% increase in adjusted operating EBITDA to $127 million with a 20.7% margin. While FX headwinds affected other expenses, lower interest costs increased EPS.
For 2024 as a whole, International Flavors & Fragrances Inc. (NYSE:IFF) is raising its expectations. Adjusted operating EBITDA is projected to be at the high end of its previously stated forecast range of $2.1 billion to $2.17 billion, and sales are now expected to be between $11.3 billion and $11.4 billion, rather than the previously anticipated range of $11.1 billion to $11.3 billion. Volume is now forecast to climb 5% to 6%, from the previously expected range of 3% to 5%, with gains throughout the portfolio.
Robert Rodriguez And Steven Romick’s First Pacific Advisors LLC was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 4 million shares worth $420.43 million as of Q3.
2. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 54
Since its founding in 1806, the Colgate-Palmolive Company (NYSE:CL), has grown to become a significant player in the personal care and home industries. The company 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. About 70% of its entire revenue comes from sales abroad, of which 45% comes from developing countries.
For the first time, Colgate-Palmolive Company (NYSE:CL) surpassed $20 billion in net sales in 2024, and organic sales growth was 7.4% across all product categories and divisions. The company’s EPS increased by double digits. The firm expanded its gross profit margins while retaining its global leadership in toothpaste (41.4% market share) and manual toothbrushes (32.2% market share). Operating cash flow increased by 10% YoY to $4.1 billion, used to pay out $3.4 billion in dividends and buybacks for shareholders. Following a 19% increase in 2023, the company also raised advertising spending by 15%, highlighting the strength and creativity 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.
Rajiv Jain’s GQG Partners was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 9.34 million shares worth $969.42 million as of Q3.
1. Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 68
The best beauty stock is Procter & Gamble Company (NYSE:PG), which has also grown to be one of the biggest producers of consumer goods worldwide. Over half of the company’s consolidated sales come from sales outside of its home market (U.S.).
The Cincinnati-based company’s beauty division, which comprises major 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, accounted for 18% of the company’s net sales in 2024, excluding the corporate segment.
In Q2 FY25, Procter & Gamble (NYSE:PG) reported a 2% YoY increase in net sales to $21.9 billion. Organic sales growth was 3%. Hair Care’s expansion in North America, Europe, and Latin America helped the Beauty segment’s organic sales rise by 2% YoY, while Personal Care’s double-digit growth was fueled by innovation and volume gains. However, despite the popularity of the high-end SK-II brand, Skin Care had a mid-single-digit loss due to lower volume.
Sales in the grooming segment increased by 2% YoY, with volume improvements led by innovation largely offset by an unfavorable geographic mix. A prior-year Gillette impairment was the primary cause of the 34% increase in diluted EPS to $1.88, while core EPS increased by 2%. Procter & Gamble Company (NYSE:PG) upheld its full-year forecast, supported by $4.9 billion in shareholder returns and $4.8 billion in solid operating cash flow.
Procter & Gamble Company (NYSE:PG)’s strategic goals, which include marketing and product innovation investments to support its portfolio of everyday, essential products, should guarantee that its brands continue to have influence over consumers and retailers, sustaining its broad moat over time.
Overall, Procter & Gamble Company (NYSE:PG) ranks first on our list of the 12 Best Beauty 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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