30 Stocks That Should Double in 3 Years

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

Number of Hedge Fund Holders: 35

e.l.f. Beauty Inc. (NYSE:ELF) provides cosmetic and skin care products under the e.l.f. Cosmetics, e.l.f. Skin, Well People, Naturium, and Keys Soulcare brand names. It offers eye, lip, face, paw, and skin care products. It sells its products through national and international retailers and DTC channels, which include e-commerce platforms.

e.l.f is the number one brand at Target, with over 20% of the market. It also moved up to the number 2 spot at Walmart. The company had 6 of the top 10 new makeup product launches in 2024. Although the overall sales forecast for FY25 was slightly lowered to 27% to 28% growth, e.l.f. Beauty Inc. (NYSE:ELF) plans to continue introducing new versions of popular products. On April 9, Canaccord analyst Susan Anderson expressed that the weakness in the company’s shares due to the tariff situation in the country presents a buying opportunity. The firm has a Buy rating and $105 price target on ELF stock.

e.l.f also doubled its market share in just 3 years. In FQ3, e.l.f.’s color cosmetics segment improved by 16% year-over-year, even though the overall market shrank 5%. This difference allowed the company to gain a 2.2% market share. It’s now the top-selling brand in terms of the number of units sold, with a 14% market share.

Polen US Small Company Growth Strategy is positive on the company’s long-term potential and stated the following regarding e.l.f. Beauty, Inc. (NYSE:ELF) in its Q3 2024 investor letter:

“The Portfolio’s top detractors were Progyny, elf Beauty, and Alarm.com. E.l.f. Beauty, Inc. (NYSE:ELF), a discount beauty company focused on cosmetics and skincare, is a new addition to the Portfolio this quarter. Please see Portfolio Activity below for further detail. We are intrigued by the company’s impressive track record for growth, margins, and returns on capital. While elf has reported significant results all year, shares came under pressure, in our view, as short-term investors primarily appeared to anticipate a slowdown in revenue growth, possibly due to investor concerns of market saturation, economic conditions, and valuation concerns, among other factors. While we are confident in how we underwrote our initial investment for returns above the portfolio average, the stock has come under even more pressure than we anticipated. We used this weakness to add to our position. We’re intrigued by the strength elf has experienced across its retailer and ecommerce channels, particularly in taking market share in a challenging consumer environment, given their relatively inexpensive prices vs. competitors.

elf Beauty, described above, is a discount beauty company focused on cosmetics and skincare. We find the company’s reputation for quality, innovation, and prices below mass cosmetics brands to be uniquely positioned. While this combination of innovation, quality, and value has led to compelling growth, we still believe it’s early days for the company. elf’s brand awareness is significantly less than that of more prominent players; it is still adding shelf space, expanding its product portfolio, and entering the skincare market. elf is also still a US-focused business, with some early signs of international success. The company’s financial profile is strong, and we expect EPS to grow by 25% over the long term.”