Jim Cramer’s Must-Watch List: 10 Stocks to Look After

7. e.l.f. Beauty Inc. (NYSE:ELF)

Number of Hedge Fund Investors: 40

Jim Cramer discussed e.l.f. Beauty, noting that it is heavily shorted, meaning many investors are betting against it. He observed that these short sellers have put pressure on the stock, causing concern among investors. He also highlighted the broader struggles in the cosmetics industry, mentioning that Estée Lauder (NYSE:EL) has been declining almost daily and Ulta Beauty (NASDAQ:ULTA) has also been weak.

“Okay, a couple of things: one, e.l.f. is a heavily shorted stock, and I thought the shorts came in and leaned on it, which scared a lot of people. Secondly, you’ve got to understand that Estée Lauder seems to go down almost every single day, and Ulta has been very weak. So the cosmetics group is doing terribly. E.l.f. is the best house in a bad neighborhood, and that’s not a place to be.”

e.l.f. Beauty, Inc. (NYSE:ELF) is an appealing investment due to its impressive financial performance, strategic growth efforts, and market leadership. In fiscal year 2024, e.l.f. Beauty, Inc. (NYSE:ELF) saw a 77% increase in net sales, surpassing $1 billion in annual revenue, and a 101% rise in adjusted EBITDA. e.l.f. Beauty, Inc. (NYSE:ELF) achieved a 71% jump in fourth-quarter net sales, becoming the second-largest brand in its category, outpacing competitors like L’Oréal Paris and Maybelline. e.l.f.’s success is driven by its focus on product innovation, digital marketing, and expanding partnerships with major retailers such as Ulta Beauty (NASDAQ:ULTA).

Additionally, its recent expansion into international markets like Mexico supports a positive growth outlook for fiscal year 2025, with projected net sales growth of 20-22%. The strong earnings performance, with a Q1 2025 EPS of $0.87—well above the expected $0.67—reinforces its solid financial outlook. Overall, e.l.f. Beauty, Inc. (NYSE:ELF)’s market share gains, international expansion, and effective cost management make it a compelling investment with strong growth potential.