8. e.l.f. Beauty, Inc. (NYSE:ELF)
Number of Hedge Fund Holders: 35
e.l.f. Beauty, Inc. (NYSE:ELF) is a multi-brand beauty company that ranks on our list because of its clean, vegan, cruelty-free, and accessible cosmetics and skincare products. Its brand portfolio includes e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People, and Keys Soulcare. The company’s operations span eye, lip, face, makeup, beauty tools, accessories, and skincare products, all 100% vegan. e.l.f. Beauty, Inc. (NYSE:ELF) takes the eighth spot on our list of the best cosmetics stocks to buy for 2025.
On April 9, Canaccord analyst Susan Anderson opined that the weakness in the company’s shares due to the tariff situation in the country posits a significant buying opportunity. The stock’s shares present a positive risk/reward opportunity after undergoing a fall of approximately -60% YTD because of tariffs and slowing tracked sales. The firm believes that e.l.f. Beauty, Inc. (NYSE:ELF) has a playbook that can absorb the effects of tariffs, aggressively estimating that around 70% of its items are exposed to Chinese tariffs. Canaccord thus maintained its buy rating for the company, setting a $105 price target on Elf Beauty shares.
The company also has strong operations. Fiscal Q3 2025 marked its 24th consecutive quarter of net sales growth and market share gains, ranking e.l.f. Beauty, Inc. (NYSE:ELF) among a rarefied group of high-growth companies. It is one of the only six public consumer companies out of 546 that has grown for 24 straight quarters and averaged at least 20% sales growth per quarter. Furthermore, e.l.f. is the only brand among nearly 1,000 cosmetics brands tracked by Nielsen to gain share for 24 consecutive quarters.
Polen US Small Company Growth Strategy stated the following about 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 skin care, 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.”
