Analysts give it 3 strong buys, 2 buys and 1 hold. The P/E is rich at 28.03 and the PEG is at 1.60.
Stocks that sizzle
Estee Lauder has climbed to an all-time high this year of $71.78 and while the trailing P/E is just as rich as Elizabeth Arden, Inc. (NASDAQ:RDEN)’s at 28.68 (the industry average is 28.69) it does have a 1.00% yield and it just reported very good numbers…again, with a 20% gain in EPS and beating expectations. It also guided higher and CEO Fabrizio Freda predicted accelerating revenue growth for Q4. Very pretty indeed.
The company has a number of popular makeup brands under its umbrella:Smashbox, MAC, Bobbi Brown, and Clinique and its own cosmetics and fragrances as well as licensing high end fragrances for Coach, Tory Burch, Michael Kors, and Tom Ford.
Analysts expect 13.95% growth and give a median price target of $77.00. Its advantage over the others is that it keeps its brand fresh with acquisitions and keeps it cachet by selling in Tier One department stores. Members of the founding Lauder family and a Lauder trust hold close to 4 million shares.
The Procter & Gamble Company (NYSE:PG) doesn’t sell pricey beauty products, but it is doing well with its beauty and grooming products which comprise two of five divisions including health care, fabric and home care, and baby and family care. The company is best known as a Dividend Aristocrat and pays a 3.10% yield at a 17.5 trailing P/E. It is the value name of these four.
The stock is already up 23.88% over the last year. Analysts expect high single-digit five-year growth of 7.75%. The company initiated a $10 billion cost savings program and a workforce reduction program in 2012. Even with savings on the bottom line it’s a stretch for growth above analyst expectations.
Caveats for The Procter & Gamble Company (NYSE:PG) are lowered Q4 guidance when it last reported causing the defensive stock to drop 6%. Despite progress in emerging markets the company still mentioned a rough macroeconomic environment ahead.
The Foolish takeaway
Women (and men) will continue to buy grooming products even in the worst of times. It’s not just to look good as much as to soothe the soul. The best of the companies that sell the sizzle are The Est for growth and The Procter & Gamble Company (NYSE:PG) for value. You’ll look good all the way to the bank.
The article Selling the Sizzle and Sell the Fizzle originally appeared on Fool.com is written by AnnaLisa Kraft.
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