5 Best Household and Personal Care Stocks To Buy

In this article, we discuss 5 best household and personal care stocks to buy. If you want to see more stocks in this selection, check out 12 Best Household and Personal Care Stocks To Buy. 

5. Ulta Beauty, Inc. (NASDAQ:ULTA)

Number of Hedge Fund Holders: 43

Ulta Beauty, Inc. (NASDAQ:ULTA) is a specialty retail company that operates stores in the United States selling cosmetics, fragrance, haircare, skincare products, and related accessories and services. On March 9, Ulta Beauty, Inc. (NASDAQ:ULTA) reported a Q4 GAAP EPS of $6.68 and a revenue of $3.23 billion, outperforming Wall Street estimates by $0.99 and $240 million, respectively. It is one of the best household stocks to invest in. 

On May 1, Loop Capital raised the price target on Ulta Beauty, Inc. (NASDAQ:ULTA) to $550 from $520, while maintaining a Hold rating on the shares. The company is now slightly more optimistic about Ulta Beauty, Inc. (NASDAQ:ULTA) after meeting with senior management, especially given the growth of the beauty product industry and the company’s expanding luxury product range and Target shop-in-shops. However, at 21.5 times expected FY23 earnings, the firm noted that the upside potential and downside risk appear to be fairly balanced at current levels.

According to Insider Monkey’s fourth quarter database, 43 hedge funds were bullish on Ulta Beauty, Inc. (NASDAQ:ULTA), compared to 54 funds in the prior quarter. D E Shaw is a prominent stakeholder of the company, with 435,243 shares worth $204 million. 

Here is what ClearBridge Large Cap Growth ESG Strategy has to say about Ulta Beauty, Inc. (NASDAQ:ULTA) in its Q2 2022 investor letter:

“After seeding the portfolio with select growth companies in the second half of 2020 and 2021, we have redirected our focus over the last several quarters to risk management. Moves during the second quarter in pursuit of greater stability included reducing consumer discretionary exposure with the sale of omnichannel cosmetics retailer Ulta Beauty (NASDAQ:ULTA).

We exited Ulta as our thesis has largely played out in terms of a post-COVID 19 earnings recovery. Ulta has steadily gained share over the last several years and its partnership with Target (TGT) represents a new avenue to gain customer loyalty. That being said, we are wary about the resilience of the consumer and the impact of labor cost inflation, which could crimp Ulta’s margin expansion in coming quarters. As with recent activity, the sale further reduces our consumer discretionary exposure and helps manage portfolio risk through an ongoing period of volatility.”

4. The Estée Lauder Companies Inc. (NYSE:EL)

Number of Hedge Fund Holders: 44

The Estée Lauder Companies Inc. (NYSE:EL) manufactures, markets, and sells skin care, makeup, fragrance, and hair care products worldwide. It is one of the best household stocks to invest in. On May 3, The Estée Lauder Companies Inc. (NYSE:EL) declared a $0.66 per share quarterly dividend, in line with previous. The dividend is payable on June 15, to shareholders of record on May 31. 

On May 4, RBC Capital analyst Nik Modi reiterated an Outperform rating on The Estée Lauder Companies Inc. (NYSE:EL) but lowered the firm’s price target on the shares to $265 from $290. The company’s third-quarter earnings were lower than expected, largely due to slower recovery in travel retail, which was not in line with Estee Lauder and travel retailers’ expectations. Despite this, strong growth was observed across all categories and geographies, suggesting that this setback will likely have a limited impact, the analyst told investors in a research note. 

According to Insider Monkey’s fourth quarter database, 44 hedge funds were bullish on The Estée Lauder Companies Inc. (NYSE:EL), compared to 52 funds in the last quarter. Terry Smith’s Fundsmith LLP is the biggest stakeholder of the company, with 5.6 million shares worth $1.40 billion. 

ClearBridge All Cap Growth Strategy made the following comment about The Estée Lauder Companies Inc. (NYSE:EL) in its Q4 2022 investor letter:

“The Estée Lauder Companies Inc. (NYSE:EL), which manufactures and markets cosmetics, fragrances, skin and hair care products across a number of well-known global brands including Clinique, MAC and Bobbi Brown, adds to our group of secular growers. Estee Lauder is a global leader in the prestige beauty space, which has outgrown the broader home and personal care category since 2010 and has historically been recession resilient. The company has substantial brand and pricing power and is over indexed to the highly profitable prestige skin care category. We believe the company’s most recent earnings report and 2023 guidance update, which was cut significantly due to uncertainty over China’s zero-COVID policy (China and travel retail are key growth drivers), provided an attractive entry point. At this point, we believe the stock has been significantly derisked and could see potential upside from a China recovery.”

3. Bath & Body Works, Inc. (NYSE:BBWI)

Number of Hedge Fund Holders: 46

Bath & Body Works, Inc. (NYSE:BBWI) operates a specialty retailer of home fragrance, body care, soaps, and sanitizer products. It is one of the top household stocks to invest in. On February 23, Bath & Body Works, Inc. (NYSE:BBWI) reported a Q4 non-GAAP EPS of $1.86 and a revenue of $2.89 billion, topping Wall Street estimates by $0.24 and $80 million, respectively. 

On May 2, Adrienne Yih, an analyst at Barclays, decreased the price target for Bath & Body Works, Inc. (NYSE:BBWI) from $44 to $37 and maintained an Equal Weight rating on the shares. According to the firm’s promotional tracker, promos in Q1 are similar to those in Q4, indicating that consumers in all income brackets are reducing their discretionary spending on products. The analyst noted an increasing risk to the hopes for a demand recovery in the second half of the year.

According to Insider Monkey’s fourth quarter database, 46 hedge funds were long Bath & Body Works, Inc. (NYSE:BBWI), compared to 51 funds in the prior quarter. 

Third Point made the following comment about Bath & Body Works, Inc. (NYSE:BBWI) in its Q4 2022 investor letter:

“We initiated a position in Bath & Body Works, Inc. (NYSE:BBWI) earlier in the year that we added to significantly in the Fourth Quarter. The company, which sells personal care and home fragrance products, separated from Victoria’s Secret in late 2021 and has struggled to find its footing in the public markets. Bath & Body Works was challenged by the normalization of trends following the pandemic, but also suffered from execution hiccups that made matters worse. On the operations front, the company spent much of 2022 without a permanent CEO, cut guidance multiple times given inventory and cost pressures, and did a poor job communicating meaningful increases in the company’s cost structure as a standalone business. On the capital allocation front, the execution of an accelerated share repurchase program was sloppy at best.

Despite these recent struggles, we believe BBWI can change its equity story, improve its earnings power, and earn a more premium valuation. The recent appointment of a new CEO, Gina Boswell from Unilever, is an encouraging first step…” (Click here to read the full text)

2. Colgate-Palmolive Company (NYSE:CL)

Number of Hedge Fund Holders: 61

Colgate-Palmolive Company (NYSE:CL) manufactures and sells consumer products worldwide, including toothpaste, toothbrushes, mouthwash, bar and liquid hand soaps, shower gels, shampoos, conditioners, deodorants and antiperspirants, dishwashing detergents, fabric conditioners, household cleaners, and pet nutrition products. It is one of the premier household stocks to invest in. 

On May 1, Deutsche Bank raised the firm’s price target on Colgate-Palmolive Company (NYSE:CL) to $88 from $80 and reiterated a Buy rating on the shares following the Q1 results.

According to Insider Monkey’s fourth quarter database, 61 hedge funds were bullish on Colgate-Palmolive Company (NYSE:CL), compared to 57 funds in the prior quarter. Dan Loeb’s Third Point is the biggest stakeholder of the company, with 11.5 million shares worth $910 million. 

Third Point made the following comment about Colgate-Palmolive Company (NYSE:CL) in its Q4 2022 investor letter:

“Colgate-Palmolive Company (NYSE:CL) remains one of the firm’s largest equity positions. The company offers defensive growth at a reasonable valuation, and we continue to see the potential for shares to deliver attractive risk adjusted returns over the next several years.

Fourth Quarter results were disappointing. The company missed on gross margins, guided 2023 well below the Street, and took another large impairment charge on its portfolio of skin care brands. The price action on the day of the print (down 5%) was extreme and perhaps reflective of growing investor frustration that the company has failed to sustainably grow earnings over the past decade.

We believe some of this “miss” was beyond the company’s control and that Colgate is on the road to delivering more predictable results. Organic growth remains strong and we expect it to start translating into earnings growth as execution improves, margins recover, and external pressures calm down…” (Click here to read the full text)

1. The Procter & Gamble Company (NYSE:PG)

Number of Hedge Fund Holders: 74

The Procter & Gamble Company (NYSE:PG) provides branded consumer packaged goods worldwide. It operates through five segments – Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care. It is one of the best household stocks to watch. On April 11, The Procter & Gamble Company (NYSE:PG) declared a $0.9407 per share quarterly dividend, a 3% increase from its prior dividend of $0.9133. The dividend is distributable on May 15, to shareholders of record on April 21. 

On April 26, Barclays analyst, Lauren Lieberman, increased The Procter & Gamble Company (NYSE:PG)’s price target to $167 from $160 while maintaining an Overweight rating on the shares. In a research note to investors, the analyst stated that the company’s Q3 fiscal results exceeded expectations, including surpassing organic sales forecasts and witnessing a significant upturn in gross margins.

According to Insider Monkey’s fourth quarter database, 74 hedge funds were bullish on The Procter & Gamble Company (NYSE:PG), and Ray Dalio’s Bridgewater Associates held the biggest position in the company, comprising nearly 5 million shares worth $757 million. 

Rowan Street Capital made the following comment about The Procter & Gamble Company (NYSE:PG) in its Q4 2022 investor letter:

“Let’s look at The Procter & Gamble Company (NYSE:PG). Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, lets say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”

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