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Estee Lauder is one of the best cosmetic stocks to buy

Estee Lauder Companies Inc is a globally recognized brand when it comes to skincare and makeup. The company’s brands include Clinique, MAC Cosmetics, Aveda, DKNY, Ermenegildo Zegna, La Mer, and Michael Kors. Estee Lauder has focused extensively on its online business to adapt to the changing situation resulting from the COVID crisis. A strong brand and digital initiatives make Estee Lauder one of the top cosmetic stocks to ride the recovery from the pandemic.

The skin care business is key

Estee Lauder’s skin care business has been the driver of growth for the company when all other segments face challenges. In fact, all the top beauty stocks 2020 have seen revenues drop. During the fourth quarter of FY2020, the skin care business rose 13% year-on-year. This growth is significant, especially as overall revenues for the quarter fell from $3.59 billion in Q42019 to $2.43 billion, a drop of close to 33% on a Y-o-Y basis.

Company CEO Fabrizio Freda said, “Asia/Pacific was strong with organic sales growth in mainland China and several other markets driving prestige beauty share gains, our skin care category grew and was further boosted by the acquisition of Dr. Jart+, and our online channel surged.  We quickly pivoted to capture consumption online during COVID-19 as retail stores around the world temporarily closed.”

Asia-Pacific is driving the rebound

Nearly all of Estee Lauder’s stores in the Asia-Pacific region have reopened as of August 2020 when the fourth-quarter results were announced. In the Americas, only 20% of the stores were closed. China has been another bright spot for the company. The sales growth there had turned positive in April and has been increasing ever since. More significantly, online sales in China are up 60% in the fourth quarter of FY2020.

Stock performances of the best cosmetic stocks

Estee Lauder’s stock is up 6.43% year-to-date. L’Oreal is up 5.4% while Revlon is down 68% during the same period. So for the year 2020, Estee Lauder’s stock is the leading performer so far. The stock closed at $219.53 on 1st October 2020.


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