Invest in Your Beauty Routine: Top Beauty Stocks to Watch in 2023.
We are a good way into Q1 of 2023. So far, the beauty industry has performed excellently with strong sales in cosmetics and fragrance. This continued success shows how far beauty and cosmetics have gone from being majorly homemade products to becoming big business.
Furthermore, the combination of today’s beauty business boom with the hybrid nature of cosmetics, and the rapid impact of social media platforms like Instagram on the demand for beauty products has made the beauty industry enticing to investors.
Below are six (6) of the top stocks in beauty and cosmetics to watch out for.
1. e.l.f. Beauty Inc. (ELF): ELF is a US-based cosmetics company that produces makeup and skincare products. The brand is well-known for offering high-quality products at affordable prices. The brand has amassed a strong online presence and is deemed to have an inspiring growth story within the beauty industry. This is due to its focus on digital marketing and e-commerce.
Due to the company’s amazing success in the beauty market, there is an exceedingly high demand for ELF shares. Thus, within the few months of Q1 2023, ELF shares have jumped an astounding 35%!
2. L'Oréal SA (LRLCY): L’Oréal is a French beauty company that owns several well-known brands, including Maybelline, Lancôme, and Garnier. The world’s largest cosmetics company, L’Oréal has a significant presence online and in the global market. The company also has a strong focus on innovation and sustainability.
Having had an extremely successful year in 2022, it’s no surprise that L’Oréal has remained a global leader in the beauty stock market that won’t easily be surpassed.
3. Estée Lauder Companies Inc. (EL): Estée Lauder is a leading beauty company that owns several popular brands, including Estée Lauder, Clinique, and MAC. The company has a strong presence in the global market and is known for its high-end beauty products.
Over the past decade, EL stock has gone up more than 500%! The company was able to outperform its peers in 2020 when the COVID-19 outbreak devastated a large portion of the beauty market. Estée Lauder is undoubtedly a company that is well-positioned for long-term growth.
4. Ulta Beauty Inc. (ULTA): Ulta Beauty is a popular beauty retailer that offers a wide range of beauty products, including makeup, skincare, and hair care. The company operates both online and in brick-and-mortar stores across the United States.
With the strong drivers of its continual introduction of new beauty products and brands, as well as having one of the strongest loyalty programs in retail, ULTA’s strong beauty category (especially in cosmetics and fragrance) is expected to do very well in 2023.
5. Coty Inc. (COTY): Coty is a global beauty company that owns several popular brands, including Covergirl, Rimmel London, and Clairol. The company has been making efforts to revitalize its brands and improve its financial performance in recent years.
The company’s recent moves have helped to make it more profitable and financially vibrant. These moves include its purchase of a 51% stake in Kylie Jenner’s beauty company, Kylie Cosmetics, and its selling off of a majority stake in Wella, its professional hair care business, to raise money to pay down debt incurred from its prior P&G acquisition.
COTY is expected to deliver strong growth in 2023. Plus, with its stock still affordably priced, its stock could likely be a smart investment to make this year.
6. LVMH Moet Hennessy Louis Vuitton SE (LVMUY): LMVH is a French luxury goods company that owns several high-end beauty brands such as Dior, Guerlain, and Benefit Cosmetics. LVMH stock has continued to be a strong relative outperformer in recent years.
The luxury market is still seeing structural growth. And with an anticipated sharp rebound in the demand for luxury goods in China, LVMH’s earnings per share (EPS) are expected to expand considerably in 2023.
Conclusion.
ULTA’s stock has been performing well and is expected to report strong Q4 results by the end of the year. However, ULTA’s valuation at 15x EV/EBITDA feels a bit high for a more mature retailer. Nevertheless, it is still considered appropriate given its defensive nature and the strong current in the beauty market. However, within the beauty space, the writer prefers COTY as a turnaround story and ELF as a growth story. The writer would continue to hold ULTA stock if they owned it but would not be a new buyer at current levels. Do you want to earn some free stocks and invest in the beauty industry? Look no further than my Robinhood link! Join Robinhood with my link and we'll both get a free stock 🤝