Beauty products may seem like one of the trappings of modern life, but they are thousands of years old, dating back to ancient Egypt. For millennia, humans have used products to moisturize their skin or improve their appearance. Over time, cosmetics have gone from being largely homemade products to big business.
Global brands and online startups vie for market share in an industry that benefits from being recession-resistant as a subsector of consumer staples -- products such as groceries or cleaning supplies that consumers purchase regardless of the state of the overall economy. Since many cosmetics brands are luxury products as well, the sector functions as something of a hybrid between consumer staples and luxury, offering the benefits of each one.
The hybrid nature of cosmetics, along with a fast-growing market in China and the accelerating effect of social media platforms such as Instagram on the demand for beauty products, makes cosmetics an appealing space for investors.
Best Cosmetic Stocks in 2025
Best Cosmetic Stocks in 2025
| Company | Market Capitalization | Description |
|---|---|---|
| Estee Lauder (NYSE:EL) | $26.4 billion | Diversified cosmetics giant with brands including Clinique, DKNY, La Mer, and Aveda. |
| Coty (NYSE:COTY) | $5.9 billion | Diversified cosmetics company that is No. 1 globally in fragrances and No. 3 in color cosmetics. |
| Ulta Beauty (NASDAQ:ULTA) | $19.3 billion | Retailer of beauty products and operator of more than 1,000 hair salons. |
| L’Oreal (OTC:LRLCY) | $183.2 billion | World’s largest cosmetics company and owner of cosmetic brands such as Garnier, Maybelline, Kiehl’s, and Lancome. |
| e.l.f. Beauty (NYSE:ELF) | $7.2 billion | Manufacturer of cosmetics known for vegan, cruelty-free products, and making professional-quality cosmetics at affordable prices. |
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1. Estée Lauder
Estée Lauder is an industry stalwart and historically a top performer. The company dates back to the postwar era, but it has evolved to become an industry powerhouse with a wide range of attractive brands.
Estée Lauder's brands include La Mer, Bumble and Bumble, and Aveda. The company has found a booming market for its high-end skincare products, though more recently, it's struggled with a slowdown in China and was forced to cut its dividend.
For the fiscal year ending June 30, 2024, Estée Lauder posted a 2% decline in revenue, and adjusted earnings per share was down 22% to $2.69.
The company has also announced a profit recovery and growth plan intended to improve gross margin, lower costs, and accelerate growth, but a turnaround will be difficult to achieve as long as China is struggling.
2. Coty
Coty has struggled since its $12.5 billion acquisition of Procter & Gamble's (PG -1.24%) beauty business in 2015, which included Cover Girl and dozens of other mass-market brands. However, consumer demand has drifted away from the mass market and toward the prestige segment, and that has made Coty a loser over the past five years.
However, the company is now in the midst of a promising turnaround. It sold off a majority stake in Wella, its professional hair care business, to raise money to pay down debt incurred from the P&G deal. That helped to make the company more profitable and financially nimble.
German conglomerate JAB Holdings now has a majority stake in the company, indicating they think the stock will be a winner. It's also brought in a new CEO and has looked to social media to fuel its growth. Coty bought a 51% stake in Kylie Jenner's beauty company, Kylie Cosmetics, forming a strategic partnership with the Kardashian family member.
The company returned to growth in fiscal 2024 with 11% organic revenue, driven by the prestige segment, and it's posted solid growth on the bottom line as well. Investors still seem skeptical of the recovery, but if Coty maintains its current momentum, the stock should respond.
3. Ulta Beauty
Ulta Beauty offers a unique opportunity among cosmetics stocks. The company is a retailer of beauty products, with stores found in strip malls across the country. Its hair salons also help drive traffic into its stores, giving the company an advantage that other brick-and-mortar retailers don't have, as well as an edge over other beauty retailers such as Sephora.
The company has put up steady comparable sales growth over its history, and the stock has been a steady winner, though 2024 was a challenging year for the company as it faced competition from mass-market retailers like CVS (CVS -0.48%) and Kohl's (KSS -1.84%). Ulta also signed a deal with Target (TGT -1.61%) to open 100 stores inside Target locations over the coming years, providing another avenue for growth for the company. Despite its recent challenges, Ulta still has a number of competitive advantages, including its superstore retail format, loyalty program, wide selection, and hair salons.
It seems to be recovering from the worst of the headwinds in 2024, and it should return to steady growth as it adjusts its value proposition.
Considering the broader tailwinds in cosmetics and the company's unique business model, Ulta seems poised for continued growth.
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4. L'Oreal
By far the biggest cosmetics company in the world, L'Oreal has a global reach and a diverse array of brands, including licensing deals with brands such as Diesel, Giorgio Armani, and Yves Saint Laurent.
L'Oreal has been aggressively investing in e-commerce, a channel that has been gaining share in the overall cosmetics market. It's introduced tech tools such as virtual try-on, shifted marketing spending to social media, and tapped into social commerce. It's seen a continued shift to the online channel, especially in emerging manners.
Sales rose 6% in the third quarter of 2024, gaining market share in professional products used in hair care and hair color, and its consumer and skin care segments are seeing solid growth as well.
L'Oreal continues to deliver strong margins as well, a testament to the strengths of its brands, smart management, and balanced diversification strategy.
5. E.l.f Beauty
E.l.f. Beauty was a breakout winner for much of 2024 as the company posted dramatic growth, capitalizing on a new Gen Z customer base that's looking for quality at an affordable price.
The company's commitment to vegan and cruelty-free products also resonates with the younger generation.
Revenue jumped 40% in the fiscal second quarter of 2025, and the company reported its 23rd consecutive quarter of market share gains and sales growth. Elf also enjoys wide gross margins, though it spends aggressively on marketing and digital expenses, as well as some other operating expenses.
Elf is expensive, but the numbers above show why it's the most exciting growth story in the cosmetics industry today.
Should you invest?
Should you buy cosmetics stocks?
Cosmetics companies don't get much attention from the financial media and tend to be overlooked by most investors. However, the overall sector offers a combination of solid growth in a mature industry, as well as dividend income. Additionally, many of the companies generate high margins because of their brand licensing relationships and the luxury nature of many products.
Price-to-earnings (P/E) ratios in the sector may be elevated in some cases. But for most investors, it's worth taking a closer look at these cosmetics stocks since they offer something for almost every investing style.
