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Spotlight on Cosmetics Stocks as the Masks Come Off (EL, COTY, ALST, ULTA)

It had to happen. The masks would eventually come off. People haven’t thought a lot about this, but it is a huge economic dynamic.

For the past 14 months, most people have gone out in public with some sort of face covering. Now, suddenly, there’s a huge jump in demand coming for cosmetics that cover more than the eyes.

As the number of vaccinated people ramp up toward herd immunity, we are all destined to shift back to a way of life that has been sorely missed, but that demands more shaving, more skin care, and more make up.

With that in mind, we take a look at a few of the leading names working on solutions to meet this surge in demand, including Estee Lauder Companies Inc (NYSE: EL), Coty Inc (NYSE: COTY), Allstar Health Brands Inc (OTC US: ALST), and Ulta Beauty Inc (NASDAQ: ULTA).

 

Estee Lauder Companies Inc (NYSE: EL) trumpets itself as one of the world’s leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products.

ELC’s products are sold in approximately 150 countries and territories under brand names including: Estée Lauder, Aramis, Clinique, Lab Series, Origins, Tommy Hilfiger, M·A·C, La Mer, Bobbi Brown, Donna Karan New York, DKNY, Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Darphin Paris, TOM FORD BEAUTY, Smashbox, Ermenegildo Zegna, AERIN, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIAN PARIS, BECCA, Too Faced, Dr. Jart+, and the DECIEM family of brands, including The Ordinary and NIOD.

Estee Lauder Companies Inc (NYSE: EL) recently announced that it has completed the first phase of increasing its ownership in DECIEM Beauty Group Inc, the Canadian-based, vertically integrated, multi-brand company.

According to its release, the Estée Lauder Companies now owns approximately 76% of DECIEM (up from 29%), and has agreed to purchase the remaining interests after a three-year period at a price that will be determined based on the future performance of DECIEM.

Even in light of this news, EL hasn’t really done much of anything over the past week, with shares logging no net movement over that period.

Estee Lauder Companies Inc (NYSE: EL) pulled in sales of $3.9B in its last reported quarterly financials, representing top line growth of 16.1%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($6.4B against $5.2B).

 

Coty Inc (NYSE: COTY) bills itself as one of the world’s largest beauty companies with an iconic portfolio of brands across fragrance, color cosmetics, and skin and body care. Coty is the global leader in fragrance and number three in color cosmetics.

Coty’s products are sold in over 150 countries around the world. Coty and its brands are committed to a range of social causes as well as seeking to minimize its impact on the environment.

Coty Inc (NYSE: COTY) most recently announced the promotion of Andrew Stanleick to Chief Executive Officer (CEO) for the beauty business created by Kylie Jenner. In addition, Stanleick will also manage Kim Kardashian West’s business for Coty with a focus for both brands on driving global expansion and entry into new beauty categories. Both businesses are part of Coty’s prestige brands.

Stanleick, who is based in New York City, will assume his new global responsibilities in addition to his current role as Coty EVP Americas.

If you’re long this stock, then you’re liking how the stock has responded to the announcement. COTY shares have been moving higher over the past week overall, pushing about 5% to the upside on above average trading volume.

Coty Inc (NYSE: COTY) generated sales of $1B, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -27.4% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($358M against $2.6B, respectively).

 

Allstar Health Brands Inc (OTCMKTS: ALST) is most speculative name in this basket, but it may also end up being the stock with the greatest upside potential simply because it is the least well known and likely has seen the least interest to date.

ALST is a Nevada Corporation established in 2017, and headquartered in Miami, Florida. AllStar is a specialty HealthCare Products Company dedicated to improving health and quality of life by offering select, nutritional supplements, over the counter remedies, and medicines all across the Americas and Europe. AllStar’s goal is to bring additional products to the market and provide new, innovative options for better health and wellbeing.

Allstar Health Brands Inc (OTCMKTS: ALST) most recently announced that it is entering into a Distribution Agreement with Indeed Laboratories, a Canadian-based skincare company for Distribution & Sales in Mexico.

Dr. Daniel Bagi, CEO of AllStar noted “We are extremely pleased to enter into this first-phase Distribution agreement with Indeed Laboratories, a brand known in both the Canadian and International markets, for their innovative, high-quality and price-accessible full skincare product line with offerings such as award winning nanoblur™, the first blurring product on the market to use revolutionary science to instantly smooth the appearance of fine lines and wrinkles.

Bagi continued, “We will begin our efforts in Mexico, where we have established a strategy for initially launching to about 1,500 specialist Doctors, followed by an online presence. The Mexican market is substantial – and while competitive, is growing at a rate where we believe we can make a major impact.” Dr. Bagi further stated, “We expect to begin sales within the next three months as there are no expected regulatory hurdles to overcome.”

Allstar Health Brands Inc (OTCMKTS: ALST) shares have been tracking sideways after constructing a technical basing pattern that has seen the stock hold the nickel level repeatedly over the past 6 months. The stock appears to be bunching up under its 50-day moving average. A break above this key threshold could be significant on a technical basis.

 

Ulta Beauty Inc (NASDAQ: ULTA) bills itself as the largest U.S. beauty retailer and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products and salon services. In 1990, the Company reinvented the beauty retail experience by offering a new way to shop for beauty – bringing together all things beauty, all in one place.

Today, Ulta Beauty operates 1,290 retail stores across 50 states and also distributes its products through its website, which includes a collection of tips, tutorials, and social content.

Ulta Beauty Inc (NASDAQ: ULTA) most recently announced financial results for the first quarter ended May 1, 2021. “The Ulta Beauty team delivered an outstanding start to the year, with sales and earnings exceeding fiscal 2020 and fiscal 2019 first quarter levels,” said Mary Dillon, chief executive officer. “I want to thank all our associates for their continued efforts to deliver great experiences and support our business in an environment that continues to be very dynamic.”

“We have emerged from 2020 with strong momentum in our sales trends, market share gains, and consumer sentiment,” said Dave Kimbell, president. “As increasing consumer confidence, the relaxation of restrictions, and a desire for newness drive increased engagement with the beauty category, our differentiated model, combined with our ongoing efforts to create meaningful guest connections, position us well to lead through the category recovery.”

If you’re long this stock, then you’re liking how the stock has responded to the announcement. ULTA shares have been moving higher over the past week overall, pushing about 9% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 6% in that time on strong overall action.

Ulta Beauty Inc (NASDAQ: ULTA) generated sales of $2.2B, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 41.7% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1B against $1.3B, respectively).

 

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