The cosmetics industry is mature, so the top spots don’t change often. The big companies have firmly established themselves in consumers’ minds. Despite this maturity, there is still income and growth to be had. The sector remains competitive, and the track record of the top companies makes them solid candidates for a portfolio that needs some stability.
We have chosen four cosmetics stocks as our top picks. They were chosen based on their longevity and the reliability of their dividends.
Estée Lauder has led the cosmetics space for so long that it is hard to imagine any other company taking over the top spot. The company excels at design and production of new products, as well as marketing. Yearly revenues top $13 billion, and its name brand recognition is superior. The cosmetics giant owns the brands Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, Bobbi Brown, La Mer, Aveda, Jo Malone London, Bumble and Bumble, Darphin, Smashbox, RODIN, and Glamglow, among others. Estée Lauder also has license agreements with Tommy Hilfiger, Donna Karan New York, Michael Kors, and Tom Ford.
Estée Lauder’s extensive marketing outlets are extraordinary. It distributes its products through department stores, specialty retailers, perfumeries, pharmacies, salons, and spas. Both annual and quarterly revenues have been steady, but the company’s operating income has shown some dramatic ups and downs over the past four quarters. The stock has had a solid year so far, posting gains of around 10% year to date, and its continued role as a cosmetics industry leader suggests the potential for additional growth.
- Average Volume: 2,091,441
- Market Cap: $51.367 billion
- P/E Ratio (TTM ): 47.42
- EPS (TTM): $2.95
- Dividend and Yield: $1.52 (1.08%)
Inter Parfums, Inc. (IPAR)
This company focuses on fragrances. It sells through its European segment and its United States segment. Inter’s brands include Balmain, Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Lanvin, Montblanc, Paul Smith, S.T. Dupont, Repetto, Rochas, Van Cleef & Arpels, Abercrombie & Fitch, Agent Provocateur, Anna Sui, bebe, Dunhill, Hollister, French Connection, Gap, Oscar de la Renta and Shanghai Tang.
Its revenue has been relatively steady for the past three quarters, and the dividend of 1.33% appears to be safe. This is probably not a growth play, but it is a steady company that can provide investors with a reliable income. Inter Parfums has posted strong gains of around 45% so far this year, and after reaching an all-time intraday high at $67.50 on Aug. 23, the shares are currently trading at $63.25. (See also: Piper Jaffray Starts Coverage on Beauty Companies.)
- Average Volume: 86,377
- Market Cap: $1.981 billion
- P/E Ratio (TTM): 41.07
- EPS (TTM): $1.54
- Dividend and Yield: $0.84 (1.33%)
Nu Skin Enterprises, Inc. (NUS)
Nu Skin’s specialty is anti-aging products. It also sells nutritional supplements. Some of its products are designed for weight management, and it also offers hair care products. The company has a robust research effort on aging, including both external influences and genetic influences. Products are distributed worldwide through direct sales and distributors – similar to the model of Mary Kay Inc. and Avon Products, Inc. (AVP ) – plus through retail stores and its online outlet.
Revenues and operating income have been dropping slightly for the past four years, but the stock price saw a significant growth of approximately 32% in 2017. Nu Skin’s winning streak has continued this year, with additional gains of around 21% so far in 2018.
- Average Volume: 397,679
- Market Cap: $4.642 billion
- P/E Ratio (TTM): 31.95
- EPS (TTM): $2.62
- Dividend and Yield: $1.46 (1.75%)
Coty Inc. (COTY)
This beauty products company is a worldwide marketer of fragrances, cosmetics, and skin care products. Fragrance brands include Calvin Klein, Marc Jacobs, Davidoff, Chloé, Balenciaga, Beyoncé, Bottega Veneta, Guess?, Katy Perry, Miu Miu, and Roberto Cavalli. Coty’s marketing outlets include supermarkets, drug stores, pharmacies, perfumeries, department stores, nail salons, and duty-free shops.
Revenues have been growing steadily over the past four years. However, unlike the other cosmetics stocks on this list, Coty has struggled this year, seeing its share price decline roughly 38% year to date. While the market appears to be concerned about increasing competition from e-commerce and standalone beauty stores such as Ulta Beauty, Inc. (ULTA), there could be some value in Coty stock after the string of losses.
- Average Volume: 6,635,331
- Market Cap: $9.242 billion
- P/E Ratio (TTM): N/A
- EPS (TTM): -$0.23
- Dividend and Yield: $0.50 (4.07%)
The Bottom Line
The cosmetics sector has some major players that offer stability and regular dividends. The demand for beauty products worldwide is still growing, and innovators in the field tend to dominate. The four companies on our list regularly offer new products and brands that keep them competitive.