Top cosmetics stocks this quarter include e.l.f. Beauty Inc., Yatsen Holding Ltd., and Coty Inc., all of which have climbed at least 77% in the last year to outpace rivals across the industry.
Cosmetics companies can be found in both the consumer staples and consumer discretionary sectors. In the last year, the S&P 500 Consumer Staples Sector Index has fallen by about 1%, while the S&P 500 Consumer Discretionary Sector Index has risen 5%. The Russell 1000 Index has climbed roughly 4% in the same period.
Below, we look at the top cosmetics stocks based on best value, fastest growth, and most momentum. All data below are as of May 22.
Best Value Cosmetics Stocks
These are the cosmetics stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
| Best Value Cosmetics Stocks | |||
|---|---|---|---|
| Price ($) | Market Capitalization (Market Cap) ($B) | 12-Month Trailing P/E Ratio | |
| Sally Beauty Holdings Inc. (SBH) | 11.06 | 1.2 | 7.6 |
| Olaplex Holdings Inc. (OLPX) | 3.40 | 2.2 | 11.3 |
| Ulta Beauty Inc. (ULTA) | 480.68 | 24.1 | 20.0 |
Source: YCharts
- Sally Beauty Holdings Inc.: Sally Beauty is a holding company that, through subsidiaries, sells beauty products to consumers in Sally Beauty stores and directly to professionals. Shares dropped 13% on May 4 after the company said it expected store closures throughout the year would cause sales to fall from 2022 levels.
- Olaplex Holdings Inc.: Olaplex Holdings is a beauty company providing premium hair-care products. The company sells its products to salons, individual consumers, and retailers. Olaplex said in earnings releases in February and May that it expects sales and net income to fall by double-digit percentages in 2023. The stock has shed more than half of its value since the beginning of February.
- Ulta Beauty Inc.: Ulta Beauty operates a chain of beauty stores throughout the U.S. The company sells cosmetics, skin and hair care products, fragrances, and salon services. Ulta’s net sales surged by close to a fifth in the last quarter of 2022 on the strength of new brands and price hikes.
Fastest-Growing Cosmetics Stocks
These are the top cosmetics stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth.
Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.
| Fastest-Growing Cosmetics Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| e.l.f. Beauty Inc. (ELF) | 85.95 | 4.6 | 183.3 | 49.3 |
| Coty Inc. (COTY) | 11.12 | 9.5 | 100.0 | 8.7 |
| Ulta Beauty Inc. (ULTA) | 480.68 | 24.1 | 23.5 | 18.2 |
Source: YCharts
- e.l.f. Beauty Inc.: e.l.f. Beauty provides mainly low-priced cosmetics products for the eyes, lips, and face. EPS nearly tripled for the company’s third quarter of fiscal 2023, ended December 31, 2022, on the strength in both retailer and e-commerce channels.
- Coty Inc.: Coty is a beauty company offering fragrances, color cosmetics, and skin and body care products. It sells its products in over 130 countries and territories. Coty’s revenue climbed 9% for the latest quarter, driven by growth in its Prestige business line—most notably high-end fragrances. EPS doubled on operational improvements, among other factors.
- Ulta Beauty Inc.: See company description above.
Cosmetics Stocks With the Most Momentum
These are the cosmetic stocks that had the highest total return over the past 12 months out of the companies we looked at.
| Cosmetics Stocks With the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return | |
| e.l.f. Beauty Inc. (ELF) | 85.95 | 4.6 | 304.5 |
| Yatsen Holding Ltd. (YSG) | 0.95 | 0.5 | 122.2 |
| Coty Inc. (COTY) | 11.12 | 9.5 | 77.4 |
| Russell 1000 Index | N/A | N/A | 4.1 |
| S&P 500 Consumer Staples Sector Index | N/A | N/A | -0.9 |
| S&P 500 Consumer Discretionary Sector Index | N/A | N/A | 5.2 |
Source: YCharts
- e.l.f. Beauty Inc.: See company description above.
- Yatsen Holding Ltd.: Yatsen is a Chinese holding company that produces and sells cosmetics and skincare products. After going public at $18.40 a share in November 2020, Yatsen’s slid throughout 2021 to reach an all-time low of 39 cents a share in May 2022. The stock’s price has since doubled but remains well below its former highs.
- Coty Inc.: See company description above.
Risks of Cosmetics Stocks
Many cosmetics consumers expect manufacturers to offer a robust and constantly-improving line of products. This places significant pressure on cosmetics companies to continue to innovate and to accurately assess and predict trends. Because creating and marketing new products is expensive, companies often must take big risks in an effort to keep up with the competition.
The creation and production of cosmetics products also expose companies to a myriad of risks. Sourcing raw materials can be difficult, for example. And cosmetics companies can be found liable for environmental damage caused by manufacturing or adverse health effects of products. Consumers may not think of these risks, but they can impact the earnings, revenue, and stock performance of a cosmetics company.
Advantages of Cosmetics Stocks
Cosmetics companies have the benefit of occupying both everyday and luxury consumer product spaces. This can enable them to diversify their product offerings to weather economic cycles. As the economy weakens, consumers tend to reduce purchases of luxury goods, perhaps giving an edge to cosmetics companies focusing on a lower price point. The opposite may be true in an economic boom.
Another advantage of the cosmetics industry is its rapid growth. The global cosmetics market was valued at over $262 billion in 2022 and is predicted to expand at a compound annual growth rate (CAGR) of 4.2% through 2030. Growth may be driven by an increase in the use of skincare and personal care products and by demand from an aging global population.
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As of the date this article was written, the author does not own any of the above stocks.
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