Everyone wants to look and feel great, and many people are willing to pay a premium to enhance their looks. The beauty industry has blossomed over the past two centuries, with the first beauty salon being opened in Rochester, New York, in 1888. Many people turn to the beauty industry to look more attractive, but some investors have turned to beauty and cosmetic stocks for downturn-resistant profits.
Some beauty stocks have outpaced major benchmarks like the S&P 500 and Nasdaq composite while operating in a recession-resistant industry. The “lipstick effect” explains why some beauty stocks can maintain good performance during recessions. People scale down from high-end beauty products to more affordable options.
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While the industry can stay afloat during a recession, it can boom during a strong economy. People have been trying to look more beautiful for thousands of years, even before Instagram and selfie culture put a stronger emphasis on a person’s looks.
The beauty and cosmetics industry is poised to benefit from long-term trends, but some beauty stocks are in a better position than others. These are some of the top stocks to consider to give your portfolio a glow-up:
| Beauty/Cosmetic Stock | YTD Performance* | 3-Year Performance* |
| e.l.f. Beauty Inc. (ticker: ELF) | -1.8% | +54.3% |
| L’Oreal SA (OTC: LRLCY) | +28.5% | +7.2% |
| Ulta Beauty Inc. (ULTA) | +19.0% | +10.0% |
| Estee Lauder Cos. Inc. (EL) | +25.9% | -28.3% |
| Procter & Gamble Co. (PG) | -7.0% | +5.8% |
*As of July 31 close.
e.l.f. Beauty Inc. (ELF)
A rising star in the beauty industry, e.l.f. Beauty has achieved net sales growth and market share gains for 25 consecutive quarters. The company’s net sales grew by 28% year over year in full-year fiscal 2025.
Leadership attributed the company’s retailer and e-commerce channels as key contributors to net sales growth. E.l.f. Beauty uses 100% vegan and cruelty-free ingredients, which has been a big draw for socially conscious Gen Z consumers.
E.l.f. Beauty has a market cap just shy of $7 billion, indicating that the firm still has plenty of room to grow. Shares are up by almost 600% over the past five years, but the stock is down by more than 40% from its all-time high. E.l.f. Beauty has offered a challenging experience for investors who bought shares in the second half of 2024, but it looks like the stock is turning a corner.
Shares are roughly flat year to date, but they have more than doubled from their mid-April low. The company did not provide a forecast for fiscal 2026, citing uncertainty around tariffs. It has a healthy balance sheet to start with, though, to help navigate market volatility.
The company has $540.6 million in current assets and $177.1 million in current liabilities. That results in a very healthy 3.05 current ratio. This metric measures a company’s ability to keep up with financial obligations. A current ratio of 1 is acceptable, while it’s more ideal to have a current ratio above 1.5. E.l.f. Beauty’s strong financial position establishes a foundation for future growth.
L’Oreal SA (OTC: LRLCY)
L’Oreal has more staying power than most beauty brands. The company has been in business for more than 100 years. The stock isn’t likely to outperform the stock market during bull runs, but it offers more stability during corrections. Shares are up by roughly 25% year to date.
Vince Stanzione, the CEO and founder of First Information, believes the beauty stock is overlooked, especially among U.S. investors. He says the company’s diversification is deep, as it owns several brands in the beauty industry.
“They own cosmetics brands Maybelline, NYX Professional and Yves Saint Laurent and Lancôme. In hair care, (they own) Garnier and professional salon brands such as Kérastase and Redkin,” says Stanzione. “In skin care, they own Vichy and La Roche-Posay as well as a range of lower-priced brands.”
L’Oreal has luxury brands that perform well during strong economies, but it also has cosmetic brands with mid-tier pricing that attract customers during economic slowdowns. Stanzione says the company has had success in gaining market share in big markets while carving out future growth opportunities: “The company generates around 30% of its income from Europe, a similar percentage from North America, and the rest of the world makes up the remainder. Emerging markets remain the potential growth drivers as the U.S. and European markets are mature.”
L’Oreal also pays a dividend yield, which should be around 1.8% for the next 12 months. The extra cash flow helps it stand out from many beauty stocks, most of which do not offer dividends.
Ulta Beauty Inc. (ULTA)
Not everyone is into beauty products, but every investor wants stocks that outperform the S&P 500 and Nasdaq composite. Ulta Beauty checks off both boxes with a five-year gain that’s close to 170%. Shares are also up by about 20% year to date and have logged more than 60% in gains from their 2025 lows.
Ulta Beauty gives customers plenty of options with approximately 29,000 products available. The company also has a strong retail footprint of more than 1,400 stores to go along with its e-commerce channels. Ulta Beauty’s recent acquisition of leading British beauty retailer Space NK will help the company expand its market share.
“International expansion is an integral part of our Ulta Beauty Unleashed plan, and the acquisition of Space NK offers a unique and strategically compelling opportunity to enter the growing U.K. market with a successful and growing brand,” said Kecia Steelman, president and CEO of Ulta Beauty. “Along with our initiatives in Mexico and the Middle East, we are creating a broader platform for Ulta Beauty to unlock long-term, profitable growth.”
The acquisition comes at a time of steady growth. Ulta Beauty delivered 4.5% year-over-year net sales growth in the first quarter. Comparable sales were up by 2.9% year over year, demonstrating healthy foot traffic in its retail properties. Ulta Beauty also opened six additional stores in the quarter.
Estee Lauder Cos. Inc. (EL)
Estee Lauder Cos. has enjoyed a strong 25% year-to-date rally after shares endured a steady downfall since 2022. The company is a global leader in prestige beauty and has a diversified business across roughly 150 countries and territories.
Estee Lauder has been in business for more than 75 years and produced $15.6 billion in net sales in fiscal 2024. However, the company has had a rough start in 2025. Sales were down by 10% year over year in the third quarter of its fiscal 2025.
Stephane de La Faverie, president and CEO of Estee Lauder, mentioned that the company’s revenue has improved sequentially. De La Faverie used that context to present upbeat guidance for fiscal 2026. “With the strategic reset of our travel retail business well underway to better reflect recent industry trends and market conditions, and provided there is meaningful resolution of the recently enacted tariffs to mitigate potential related negative impacts, we are confident in our ability to return to sales growth in fiscal 2026,” de La Faverie said in the press release.
And for what it’s worth, Michael Burry’s Scion Asset Management reported in its 13F filing for the first quarter that it stacked major put options against familiar brand names and cut all its long positions down to a single stock: Estee Lauder. Not only that, Scion doubled down on EL, reaching a total of 200,000 shares, as it bet against previous other holdings.
Procter & Gamble Co. (PG)
Procter & Gamble isn’t a pure play in the beauty and cosmetics industry. However, beauty is one of the company’s five core categories. Net sales dropped slightly year over year, while organic sales inched higher in the third quarter of fiscal 2025.
Although its high-growth days are far in the rearview mirror, Procter & Gamble is a valuable inflation hedge due to its wide variety of consumer goods. The company also recently marked its 69th consecutive year of hiking its dividend and its 135th consecutive year of paying dividends to its investors.
Procter & Gamble has a generous 2.8% forward yield, and the stock is an ideal holding for retirees who want less volatility and high cash flow from their portfolios.
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5 Best Beauty and Cosmetic Stocks to Buy originally appeared on usnews.com
