Jim Cramer Recommends These 10 Stocks

7. The Estee Lauder Companies Inc. (NYSE:EL)

Number of Hedge Fund Investors: 47

The Estee Lauder Companies Inc. (NYSE:EL) is well-positioned for ongoing success thanks to its strong lineup of established brands like Estée Lauder, Clinique, MAC, La Mer, and Bobbi Brown, and its presence in over 150 countries. The Estee Lauder Companies Inc. (NYSE:EL)’s focus on expanding into emerging markets, where rising middle-class incomes and growing demand for premium beauty products offer substantial growth opportunities, supports its positive outlook.

Jim Cramer reports that The Estee Lauder Companies Inc. (NYSE:EL)’s longtime CEO, Fabrizio Freda, will retire next year. This announcement came on the same day The Estee Lauder Companies Inc. (NYSE:EL) released disappointing guidance for fiscal 2025. Cramer noted that the leadership change is timely, considering The Estee Lauder Companies Inc. (NYSE:EL)’s ongoing struggles.

“Estee Lauder ’s longtime CEO, Fabrizio Freda, is set to retire next year. The cosmetics maker announced the move on the same day it issued disappointing fiscal 2025 guidance. In my Sunday column for Investing Club members, I wrote that it was time for a change at the top given Estee Lauder’s prolonged struggles.”

The Estee Lauder Companies Inc. (NYSE:EL)’s solid financial performance, marked by steady revenue growth, profitability, and strong cash flow, demonstrates effective management and operational efficiency. The Estee Lauder Companies Inc. (NYSE:EL)’s strategic investments in digital and e-commerce capabilities have also boosted its ability to tap into the online beauty market.

Baron Durable Advantage Fund stated the following regarding The Estée Lauder Companies Inc. (NYSE:EL) in its fourth quarter 2023 investor letter:

“The Estée Lauder Companies Inc. (NYSE:EL) is a leading manufacturer, marketer, and retailer of prestige beauty products globally. Shares continued underperforming in the fourth quarter after management cut the company’s outlook for the fiscal year ending 6/30/2024. This downward revision was mainly driven by a worsening outlook in China, business disruptions in Israel and other parts of the Middle East, and worsening F/X headwinds. Estee Lauder’s disproportionate exposure to the Chinese consumer and the travel retail channel in Asia relative to peers continues to place pressure on both growth and margins. We decided to exit our position and reallocate to ideas in which we have greater conviction.”