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Estee Lauder Companies Inc (EL), Avon Products, Inc. (AVP): The Search for Immortality – Spawning Great Investments in Any Era

A great way to buy into Avon but limit exposure if you are nervous about past performance is to purchase shares of Exchange Traded Fund Guggenheim S&P 500 Equal Weight Consumer Staples (RHS), which is 3.18% Avon holdings. This fund is showing good performance stats so far:

Quarter End Performance as of 3/31/13

YTD
(%)
1 Month
(%)
3 Month
(%)
6 Month
(%)
1 Year
(%)
3 Year
(%)
5 Year
(%)
10 Year
(%)
SI
(%)
NAV 17.16 6.08 17.16 18.70 25.17 16.95 12.76 N/A 10.73
Market Price 17.27 5.63 17.27 18.55 25.08 16.96 12.79 N/A 10.74

While Avon Products, Inc. (NYSE:AVP) caters to middle America, Mom and Pop, and apple pie, giant Estee Lauder Companies Inc (NYSE:EL) caters to the high end professional female or well-heeled society maven.  However, this company only has one CAPS star right now, so the Foolish audience appears to be shying away from it.  Why? Just like Avon, Estee Lauder has a solid, loyal clientele and products that are known to work. Earnings results announced recently showed strong earnings and raised revenue guidance for the next upcoming quarter. But amidst that news, execs warned that growth was not as strong as was expected, and Korean and Southern European markets are sluggish. The reason given for the slowing of growth is increased competition (could women everywhere be starting to realize that Avon Products, Inc. (NYSE:AVP)’s products work just as well?). Also, Duty Free Americas is now suing Estee Lauder, as it claims the cosmetic’s giant actively tried to prevent its products from being sold in airport duty free shops.  Top all these concerns with an over $70 per share price tag (the stock rose over 9% last year), and this Fool says to stay clear until the coming correction is over with and the dust settles. But when that happens, jump in and grab shares, as this is a time honored brand that will continue to earn through its very solid line of anti-aging facial products.

Another good one to keep an eye on is L’Oreal, the king of the drug store brand cosmetics and also a strong, reputable company with a good brand and great products.  Women are loving their new BB cream, a cream that reduces the appearance of big pores, fine lines, under-eye circles, and all the banes of our existence whether we are young or old. At a 3, this stock has a respectable CAPS rating, and according to all the Foolish commentary, it is because even though the market took a dive, the company’s fundamentals stayed strong.  EPS is estimated to be $1.35, and the stock is currently trading at $34.55 per share with a market cap of $104.2 billion.  Headquartered in France, L’Oreal is the world’s largest cosmetics company and is beloved of women everywhere. L’Oreal has lipstick with strong staying power, mascaras that don’t flake, and face powder that is formulated not to fall into the creases left by wrinkles and make a woman look like an aging clown. The company is strongly focused to tackling the Chinese market too, they are forecasting 250 million new Chinese customers in the next 10-15 years.  This means they have an identified growth path and are plunging forward, full speed ahead.

No matter what the economy is doing, women want to look younger. When things are good, they want to look younger to celebrate.  When things are bad, cosmetics become a “feel-good” purchase. Companies that bring products to market that make us look better will always be a good investment.

The article The Search for Immortality – Spawning Great Investments in Any Era originally appeared on Fool.com and is written by Brenda Johnson.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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