We recently compiled a list of the 7 Best Vegan Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where E.l.f. Beauty, Inc. (NYSE:ELF) stands against the other vegan stocks.
Vegan food consists of products that are entirely free of animal ingredients or by-products, including meat, poultry, fish, dairy, eggs, honey, and other animal-derived substances. Veganism is both a dietary and lifestyle choice aimed at avoiding animal exploitation while promoting ethical, environmental, and health benefits. That said, vegan and plant-based products appeal to a much broader audience than just those avoiding meat and animal products. This is especially true for meat substitutes. Pat Brown, founder of Impossible Foods, believes that vegetarians are not the primary audience for these products, which are designed to closely mimic the taste and texture of meat. Instead, meat substitutes are aimed at meat eaters, helping them transition to a plant-based diet more easily by offering familiar flavors and experiences.
Additionally, a study published by the Journal of the American Medical Association (JAMA) found that individuals who follow a vegan diet have a higher life expectancy than those on a meat-based diet. This has led health-conscious consumers to embrace vegan food, positively impacting leading plant-based food stocks. Another study by researchers at Oxford’s Martin School found that a global shift toward diets rich in fruits and vegetables and less reliant on meat could potentially prevent around 8 million deaths by 2050. This dietary transition could also save approximately $1.5 trillion in climate-related costs and reduce greenhouse gas emissions by over 60%. Studies consistently show that Gen Z is particularly interested in plant-based diets, driving companies to develop products tailored to this key demographic. Plant-based diets also offer substantial environmental benefits.
Veganism extends beyond just food—clothing made without animal products also qualifies as vegan fashion. More specifically, vegan fashion often refers to items typically made from plant-based or synthetic alternatives to animal materials. In 2022, the global market for non-animal leather clothing and accessories reached approximately $41 billion, with the United States as the largest market. Footwear is a key segment in this shift, where leather has long been valued for quality in both sneakers and formal shoes. To meet growing demand for animal-free options, brands are innovating. In 2021, Adidas introduced a Stan Smith sneaker made from a mushroom-based leather alternative, and has also collaborated with vegan fashion leader Stella McCartney on other vegan footwear.
Despite rising awareness of animal welfare in fashion, this hadn’t consistently translated into consumer behavior until more recently. A new global YouGov survey reveals that over a quarter (27%) of people now actively avoid animal-based fashion. The poll also shows strong public support for cruelty-free fashion, with 70% of Americans agreeing that fashion companies should reduce their use of animal-derived materials, invest in alternatives, and transition to sustainable, animal-friendly materials.
According to Fortune Business Insights, the global vegan food market was valued at $33.14 billion in 2023 and is expected to grow to $37.37 billion in 2024. By 2032, it is projected to reach $103.00 billion, with a compound annual growth rate (CAGR) of 13.51% over the forecast period. Bloomberg Intelligence further projects that the plant-based food market could account for 7.7% of the global protein market by 2030, with an estimated value exceeding $162 billion. Moreover, meat alternatives are set to capture a significant portion of the plant-based food market through 2030. If this sector mirrors the growth of plant-based milk, Bloomberg Intelligence projects that it could expand from its current $4.2 billion to $74 billion over the next decade.
Our Methodology
We first compiled a list of vegan stocks by sifting through financial media reports. We selected the following vegan stocks based on hedge fund sentiment toward each company. The sentiment data was sourced from Insider Monkey’s database, which tracks 912 elite hedge funds as of the end of Q2 2024. The list is organized in ascending order, based on the number of hedge fund investors in each firm.
At Insider Monkey, we are obsessed with 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).
A close up of the lip and eye products from the company on a model in a fashion and beauty shoot.
E.l.f. Beauty, Inc. (NYSE:ELF)
Number of Hedge Fund Holders: 40
Oakland, California-based e.l.f. Beauty, Inc. (NYSE:ELF) offers high-quality, cruelty-free, and vegan makeup through its portfolio of five brands: e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People, and Keys Soulcare. The company uses only animal-free ingredients in all its products.
On October 21, Piper Sandler reiterated its positive outlook on e.l.f. Beauty, Inc. (NYSE:ELF), keeping an Overweight rating and a $162 price target. The firm’s analysis pointed to strong growth potential for the cosmetics company, especially through digital and international expansion. While scanner data shows a slowdown, with sales up 8.5% year-over-year for the four weeks ending October 6—down from 26.3% in the first fiscal quarter—Piper Sandler remains confident, with the firm believing that e.l.f. Beauty, Inc. (NYSE:ELF) is well-positioned to meet or even exceed the upper end of management’s fiscal year targets.
In Q1 2025, the company outperformed expectations, reporting earnings per share of $0.87, above the forecasted $0.67, and revenue of $324.48 million, surpassing analysts’ predictions. This success was driven by strong demand and the launch of popular products like the Power Grip line. For fiscal 2024, the company reported over $1 billion in net sales, a 77% year-over-year increase, with international sales up 115%. Additionally, e.l.f. Beauty, Inc. (NYSE:ELF) achieved a 30% growth in its color cosmetics segment.
Shelton Sustainable Equity Fund stated the following regarding E.l.f. Beauty, Inc. (NYSE:ELF) in its Q2 2024 investor letter:
“E.l.f. Beauty, Inc. (NYSE:ELF) operates as a cosmetic company. The company offers beauty products such as eyeliners, lipsticks, creams, brushes, powder, and skin care products for eyes, lips, face, and paw. e.l.f. Beauty is the first beauty company that is Fair Trade Certified, the first mass brand to be 100% vegan and cruelty free, and fits our PRIME criteria, primarily the impact and principles portion of our thesis, as e.l.f.‘s low cost and high quality provides access to makeup and skincare for every customer.”
Overall ELF ranks 2nd on our list of the best vegan stocks to buy according to hedge funds. While we acknowledge the potential of ELF as an investment, our conviction lies in the belief that certain 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 ELF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.