In this article, we will take a look at the 5 best beauty stocks to buy now. To see more such companies, go directly to 14 Best Beauty Stocks To Buy Now.
5. Ulta Beauty, Inc. (NASDAQ:ULTA)
Number of Hedge Fund Holders: 43
Beauty products and salon company Ulta Beauty, Inc. (NASDAQ:ULTA) shares are gaining ground after the company crushed analyst estimates for the fourth quarter. After the quarterly results, Canaccord Genuity analyst Susan Anderson gave bullish comments on Ulta Beauty, Inc. (NASDAQ:ULTA) and said the company is expected to continue its growth momentum as “management looks to open additional doors across the US, expands in Targets, and increases its penetration of prestige and luxury products.”
A total of 43 hedge funds tracked by Insider Monkey had stakes in Ulta Beauty, Inc. (NASDAQ:ULTA). The net worth of these stakes was $1.5 billion. The biggest stakeholder of Ulta Beauty, Inc. (NASDAQ:ULTA) was D E Shaw which had a $204 million stake.
4. The Estée Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Holders: 44
Cosmetics company The Estée Lauder Companies Inc. (NYSE:EL) is one of the most popular beauty stocks among the elite hedge funds tracked by Insider Monkey. 44 out of 943 hedge funds in Insider Monkey’s database had stakes in The Estée Lauder Companies Inc. (NYSE:EL) as of the end of the fourth quarter of 2022. The biggest hedge fund stakeholder of The Estée Lauder Companies Inc. (NYSE:EL) was Terry Smith’s Fundsmith LLP which had a $1.4 billion stake in the company. The second biggest stakeholder of The Estée Lauder Companies Inc. (NYSE:EL) was Ken Griffin’s Citadel Investment Group which had a $220 million stake.
In March 2023, TD Cowen analyst Oliver Chen started covering The Estée Lauder Companies Inc. (NYSE:EL) with a Buy rating. The Estée Lauder Companies Inc. (NYSE:EL) said in a note to investors that the company’s brands, customer loyalty and a “long-awaited inflection in demand across the Chinese market” is expected to drive upside for the stock.
ClearBridge All Cap Growth Strategy made the following comment about The Estée Lauder Companies Inc. (NYSE:EL) in its Q4 2022 investor letter:
“The Estée Lauder Companies Inc. (NYSE:EL), which manufactures and markets cosmetics, fragrances, skin and hair care products across a number of well-known global brands including Clinique, MAC and Bobbi Brown, adds to our group of secular growers. Estee Lauder is a global leader in the prestige beauty space, which has outgrown the broader home and personal care category since 2010 and has historically been recession resilient. The company has substantial brand and pricing power and is overindexed to the highly profitable prestige skin care category. We believe the company’s most recent earnings report and 2023 guidance update, which was cut significantly due to uncertainty over China’s zero-COVID policy (China and travel retail are key growth drivers), provided an attractive entry point. At this point, we believe the stock has been significantly derisked and could see potential upside from a China recovery.”
3. Bath & Body Works, Inc. (NYSE:BBWI)
Number of Hedge Fund Holders: 46
Bath & Body Works, Inc. (NYSE:BBWI)’s cosmetics offerings include fragrances, gels, moisturizers, soaps, body care products. Bath & Body Works, Inc. (NYSE:BBWI) jumped in March after a Bank of America survey indicated that young customers are engaged with the brand. 15% of the respondents in the survey liked the brand more than last year.
BofA maintained a Buy rating on Bath & Body Works, Inc. (NYSE:BBWI).
A total of 46 hedge funds tracked by Insider Monkey had stakes in Bath & Body Works, Inc. (NYSE:BBWI). The total value of these stakes was $2.9 billion.
Third Point made the following comment about Bath & Body Works, Inc. (NYSE:BBWI) in its Q4 2022 investor letter:
“We initiated a position in Bath & Body Works, Inc. (NYSE:BBWI) earlier in the year that we added to significantly in the Fourth Quarter. The company, which sells personal care and home fragrance products, separated from Victoria’s Secret in late 2021 and has struggled to find its footing in the public markets. Bath & Body Works was challenged by the normalization of trends following the pandemic, but also suffered from execution hiccups that made matters worse. On the operations front, the company spent much of 2022 without a permanent CEO, cut guidance multiple times given inventory and cost pressures, and did a poor job communicating meaningful increases in the company’s cost structure as a standalone business. On the capital allocation front, the execution of an accelerated share repurchase program was sloppy at best.
Despite these recent struggles, we believe BBWI can change its equity story, improve its earnings power, and earn a more premium valuation. The recent appointment of a new CEO, Gina Boswell from Unilever, is an encouraging first step…” (Click here to read the full text)
2. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 61
Colgate-Palmolive Company (NYSE:CL) is a giant in the cosmetics industry, with some of the most popular soap, skincare, and toothcare brands. Colgate-Palmolive Company (NYSE:CL) stock is also highly popular among the elite hedge funds tracked by Insider Monkey. As of the end of the fourth quarter of 2022, 61 hedge funds in Insider Monkey’s database had stakes in Colgate-Palmolive Company (NYSE:CL). The total value of these stakes at the end of December 2022 was $4.5 billion. The biggest hedge fund stakeholder of Colgate-Palmolive Company (NYSE:CL) was Dan Loeb’s Third Point which had a $910 million stake in the company.
Third Point made the following comment about Colgate-Palmolive Company (NYSE:CL) in its Q4 2022 investor letter:
“Colgate-Palmolive Company (NYSE:CL) remains one of the firm’s largest equity positions. The company offers defensive growth at a reasonable valuation, and we continue to see the potential for shares to deliver attractive risk adjusted returns over the next several years.
Fourth Quarter results were disappointing. The company missed on gross margins, guided 2023 well below the Street, and took another large impairment charge on its portfolio of skin care brands. The price action on the day of the print (down 5%) was extreme and perhaps reflective of growing investor frustration that the company has failed to sustainably grow earnings over the past decade.
We believe some of this “miss” was beyond the company’s control and that Colgate is on the road to delivering more predictable results. Organic growth remains strong and we expect it to start translating into earnings growth as execution improves, margins recover, and external pressures calm down…” (Click here to read the full text)
1. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 74
The Procter & Gamble Company (NYSE:PG) is behind some of the most famous shampoos, waxing creams, hair care products, skincare products, grooming products and cosmetics worldwide.
There could be several reasons to add this top beauty stock to your portfolio in 2023, the chief being The Procter & Gamble Company (NYSE:PG)’s stellar dividend history. The Procter & Gamble Company (NYSE:PG) has upped its dividends for over six decades now.
The Procter & Gamble Company (NYSE:PG) is a highly popular stock among elite hedge funds tracked by Insider Monkey. 74 hedge funds tracked by Insider Monkey had stakes in The Procter & Gamble Company (NYSE:PG) at the end of the fourth quarter of 2022. The biggest stakeholder of The Procter & Gamble Company (NYSE:PG) was Bridgewater Associates of Ray Dalio which had a $757 million stake.
Rowan Street Capital made the following comment about The Procter & Gamble Company (NYSE:PG) in its Q4 2022 investor letter:
“Let’s look at The Procter & Gamble Company (NYSE:PG). Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, lets say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”
You can also take a peek at 13 Best Medical Stocks To Invest In and 25 Most Exclusive Luxury Brands in the World.
