In this piece, we will take a look at the 15 best beauty stocks to invest in. If you want to skip our overview of the global beauty industry, then you can take a look at the 5 Best Beauty Stocks To Invest In.
The global beauty industry sits right at the heart of the multi billion dollar media and entertainment sector. Newscasters, television show hosts, models, actors, and even politicians have to groom themselves in order to address hundreds of thousands of people daily. Therefore, the beauty industry, made up of global giants, sits right at the top of the stock market when it comes to valuation.
Don't believe us? Well, consider Insider Monkey's coverage of the 14 Biggest Beauty Companies In The World. At the top of the list are global beauty and cosmetics giants the likes of L'Oréal S.A. (OTC:LRLCF), The Estée Lauder Companies Inc. (NYSE:EL), and Unilever PLC (NYSE:UL). Combined, these three firms have a whopping market capitalization of $438 billion, a figure that underscores the significant money that stock market investors have piled into the shares of the global beauty giants.
When it comes to analyzing beauty stocks, they can broadly be categorized as consumer defensive firms. This is because personal health products, such as shampoos, deodorants, and soap - which are some of the most common beauty products in the world, are also essential items in the daily lives of millions of people.
The nature of the global beauty industry, particularly due to its proximity to media and entertainment, means that beauty stocks can simultaneously benefit from stable consumer markets and innovation. Modern day science has enabled firms such as the Italian Framesi and L'Oréal to provide innovative new products that use stem cells and fatty acids to help the human body battle against anti ageing and genetic effects.
Additionally, the beauty industry's requirement to ensure that it is up to date with all the latest trends younger generations, such as Gen Z, are following means that they are among some of the first adopters of advanced technologies such as artificial intelligence. In fact, AI in beauty is one of the hottest trends in the world right now, with firms such as the Taiwanese Perfect Corp. (NYSE:PERF) using artificial intelligence for skin analysis, grooming, and other beauty applications. Despite the fact that its shares are down by 73% since 2022, the company is busy updating its AI portfolio. March 2024 saw Perfect Corp. (NYSE:PERF) significantly improve the image processing capabilities of its jewelry virtual try-on (VTO) software by allowing users to upload 3D images. This software had previously allowed jewelry brands to create VTO effects with 2D images and eliminate the need to use complex 3D files.
Apart from NYSE:PERF, there are several other beauty technology stocks that are at the edge of the industry and exposed to innovation at the same time. A couple of these are Oddity Tech Ltd. (NASDAQ:ODD), Elevai Labs, Inc. (NASDAQ:ELAB), and Cutera, Inc. (NASDAQ:CUTR). Starting from Elevai, the firm is a high end technology company when it comes to skincare products. It claims to use "ultra-small, nanoparticle compartments packed with growth factors" called "exosomes" to try and replicate the skin's natural healing process and deliver a fresh and youthful look. Yet, the exosomes haven't impressed Wall Street, with the stock down 78% over the past twelve months even as Elevai Labs, Inc. (NASDAQ:ELAB) saw some magic in January after it announced a global licensing deal for ethically sourced stem cells.
Out of the other two beauty stocks in our brief analysis of beauty technology, only Oddity Tech Ltc. (NASDAQ:ODD) is worth mentioning when talking about performance. This beauty stock is up 57% over the past six months, with the surge starting roughly a month after Bank of American Corporation (NYSE:BAC) upgraded the shares to Buy from Neutral and, at the same time, cut the share price target to $37 from $60. Oddity is another beauty stock that sits right at the heart of the intersection of the multi billion dollar industry with artificial intelligence.
It uses software to help people buy beauty products right from the comfort of their homes, and the current bullish surge in share prices came after the firm's financial report for the third quarter of 2023. The figures marked a strong 37% annual revenue and 231% adjusted net income growth, and Oddity Tech Ltd. (NASDAQ:ODD) topped this up in its succeeding financials which saw it reverse a year ago operating loss into income of $6.5 million.
So, seems like beauty stocks are dependent more on their underlying fundamentals, and if the product technology is able to generate market penetration and revenue then they will see investor interest.
Estee Lauder has seen a steep decline in its travel retail business in both China and Korea. We expect the travel retail business to begin to recover as we move into calendar 2024, but it will likely be in the second half of the year. China remains a key component to the Estee Lauder story and timing of a recovery in China remains difficult to forecast.
So which beauty stocks are on the hedge fund radar? Some notable picks are Kenvue Inc. (NYSE:KVUE), The Procter & Gamble Company (NYSE:PG), and Colgate-Palmolive Company (NYSE:CL).
15 Best Beauty Stocks To Invest In
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Our Methodology
To make our list of the best beauty stocks to invest in, we ranked all publicly traded companies on U.S. exchanges with a presence in the beauty industry by the number of hedge funds that had bought their shares in Q4 2023. Out of these, the top beauty stocks were chosen.
For these top beauty stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Cutera, Inc. (NASDAQ:CUTR) is a high end beauty company that sells devices used in micro needling, tissue heating, and other care procedures. The firm has struggled on the financial front as of late by having missed analyst EPS estimates in three out of its four latest quarters.
During last year's fourth quarter, 20 out of the 933 hedge funds profiled by Insider Monkey had bought and owned a stake in Cutera, Inc. (NASDAQ:CUTR). Efrem Kamen's Pura Vida Investments was the firm's biggest hedge fund shareholder due to its $3.7 million investment.
Along with The Procter & Gamble Company (NYSE:PG), Kenvue Inc. (NYSE:KVUE), and Colgate-Palmolive Company (NYSE:CL), Cutera, Inc. (NASDAQ:CUTR) is a top beauty stock according to hedge funds.
The Beauty Health Company (NASDAQ:SKIN) is a small California based firm that makes and sells skincare products and serums. The stock is seeing little love from analysts, as the shares are rated Hold on average.
By the end of Q4 2023, 20 out of the 933 hedge funds tracked by Insider Monkey had bought and owned the firm's shares. The Beauty Health Company (NASDAQ:SKIN)'s largest investor among these is Christian Leone's Luxor Capital Group due to its $20.4 million investment.
Helen of Troy Limited (NASDAQ:HELE) is a mid sized personal products firm that sells hair care products and styling accessories. The shares have had a turbulent time on the market this year, despite Helen of Troy Limited (NASDAQ:HELE)'s latest financial results marking a 46% annual quarterly profit growth.
Insider Monkey dug through 933 hedge fund portfolios for their December quarter of 2023 shareholdings and found 21 Helen of Troy Limited (NASDAQ:HELE) stakeholders. Ken Fisher's Fisher Asset Management owned the biggest stake which was worth $50.6 million.
Coty Inc. (NYSE:COTY) is a diversified beauty stock that provides perfumes, cosmetics, and other associated products. The firm scored a win in March 2024 when it won the Euronext stock exchange's best listing award for large cap stocks.
By the end of last year's final quarter, 21 out of the 933 hedge funds profiled by Insider Monkey had bought the firm's shares. The largest Coty Inc. (NYSE:COTY) hedge fund shareholder is Steve Cohen's Point72 Asset Management through its $50 million stake.
Inter Parfums, Inc. (NASDAQ:IPAR) is a globally known American perfume company headquartered in New York City. The shares are rated Buy on average, and the average analyst share price target is $170.60.
As Q4 2023 ended, 22 out of the 933 hedge funds tracked by Insider Monkey had bought a stake in Inter Parfums, Inc. (NASDAQ:IPAR). Chuck Royce's Royce & Associates owned the biggest stake which was worth $70.9 million.
Hims & Hers Health, Inc. (NYSE:HIMS) sells a variety of beauty products such as skin oils, sunscreen, and face wash. The firm expanded its healthcare business division in January 2024 by augmenting services through adding in person healthcare options.
Insider Monkey scoured through 933 hedge fund portfolios for last year's fourth quarter and found that 24 had held a stake in Hims & Hers Health, Inc. (NYSE:HIMS).
Spectrum Brands Holdings, Inc. (NYSE:SPB) is a consumer products company that sells personal care items under the Remington brand. The firm posted a strong set of first quarter results in March 2024 when it beat analyst revenue and adjusted earnings per share estimates by 2.8% and 102%, respectively.
For their December quarter of 2023 shareholdings, 25 out of the 933 hedge funds covered by Insider Monkey's research had bought and owned Spectrum Brands Holdings, Inc. (NYSE:SPB)'s shares. The firm's largest stakeholder in our database is Richard S. Pzena's Pzena Investment Management due to its $86.2 million investment.
Unilever PLC (NYSE:UL) is one of the biggest beauty companies in the world with tens of billions of dollars in sales every year. It is a consumer defensive stock, but also benefits from significant resources to allow it to research new beauty technologies. 2024 has been a disappointing month for its ice cream fans due to news that Unilever PLC (NYSE:UL) is shelving the business division.
By the end of 2023's fourth quarter, 25 out of the 933 hedge funds part of Insider Monkey's database had bought a stake in the company. Unilever PLC (NYSE:UL)'s biggest hedge fund investor is Ken Fisher's Fisher Asset Management as it owns $525 million worth of shares.
e.l.f. Beauty, Inc. (NYSE:ELF) is a skincare products company headquartered in Oakland, California. The firm has performed well on the financial front recently, since it has beaten analyst EPS estimates in all four of its latest quarters.
During December 2023, 34 out of the 933 hedge funds covered by Insider Monkey's research were e.l.f. Beauty, Inc. (NYSE:ELF)'s shareholders. Jim Simons's Renaissance Technologies owned the largest stake which was worth $224 million.
6. International Flavors & Fragrances Inc. (NYSE:IFF)
Number of Q4 2023 Hedge Fund Shareholders: 41
International Flavors & Fragrances Inc. (NYSE:IFF) is a sizeable chemicals company that caters to the needs of the beauty industry. March 2024 has been a crucial month for the firm as it has seen International Flavors & Fragrances Inc. (NYSE:IFF) spin off its pharma division for a $2.4 billion price tag.
41 out of the 933 hedge funds part of Insider Monkey's Q4 2023 database were the firm's shareholders. International Flavors & Fragrances Inc. (NYSE:IFF)'s biggest hedge fund investor is Scott Ferguson's Sachem Head Capital as it owns $387 million worth of shares.
Kenvue Inc. (NYSE:KVUE), International Flavors & Fragrances Inc. (NYSE:IFF), The Procter & Gamble Company (NYSE:PG), and Colgate-Palmolive Company (NYSE:CL) are some top hedge fund beauty stock picks.
