Beauty stocks continue to shine as a lucrative investment opportunity, driven by consistent growth and innovation in the overall industry. The global cosmetics market is estimated to reach around $661 billion by 2032, increasing from $398 billion in 2023. That’s a compound annual growth rate (CAGR) of around 3.3% from 2024 to 2028, so the sector is showing no signs of slowing down. This growth is fueled by increasing consumer demand for skincare, cosmetics, and personal care products, especially in emerging markets.

But in this volatile market where discretionary spending is down, investing in the right beauty and cosmetics stocks will require analysis of where the companies have been and where they’re going, both financially and strategically. As consumer preferences evolve, companies will need to innovate and meet market demands, ensuring their long-term growth and stability. The three companies on this list are leading the way.

e.l.f. Beauty (ELF) 

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E.l.f. Beauty (NYSE:ELF) offers high-quality, affordable cosmetics which has earned it a loyal customer base and a strong market presence. But what really sets it apart from its competitors is its strategy of offering new and novel products. “The consumer is becoming less loyal and so they need that newness. They need something constantly innovating…. And that’s what e.l.f. does,” says Piper Sandler senior research analyst Korinne Wolfmeyer.

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The company’s newest financial results will be released on August 8, but previous quarter results showed an impressive 78% jump in net sales, reaching $146.5 million for the first quarter of fiscal year 2025. Its gross profits also soared by 60% to $96.1 million, thanks to efficient management and strong consumer demand. E.l.f.’s creative marketing strategies and robust e-commerce performance are driving its growth.

Recently, several analysts have raised their forecasts, and TipRanks has an average price target of $228 which represents a 31% upside. Among beauty stocks, analysts rate E.l.f. as a “strong buy” due to its resilience and ability to maintain profitability despite market challenges.

Shiseido Company (SSDOY)

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Shiseido Company (OTCMKTS:SSDOY) is a leading Japanese beauty and cosmetics company that offers a wide range of products including skincare, makeup and fragrances. While the name of the parent company is relatively unknown in the U.S., it manufactures notable brands like NARS and bareMinerals.

While SSDOY is down 30% in the last 12 months and 55% in the last five years, its six month and 30 day results are doing much better. Additionally, Shiseido recently saw a big drop in short interest, meaning fewer investors are betting against the cosmetics stock. This positive shift comes as the company’s stock price has been steadily rising, reflecting growing confidence in its performance.