2 Beauty Brands Soaring on Holiday Skincare Demand

2 Beauty Brands Soaring on Holiday Skincare Demand

In the spirit of the holidays, we at LikeFolio are taking full advantage of our consumer insights machine to curate the ultimate holiday stock watchlist.

We started yesterday with three companies leveraging artificial intelligence (AI) to boost holiday profits. (Miss that issue? Find it here.)

But high-level consumer trends are also screaming at us – namely, one that reveals an uptick in spending among a surprisingly powerful cohort of young consumers.

And no, we’re not talking about Gen Z or millennials this time.

We’re talking about Generation Alpha – as in, kids born in 2010 or later.

This group of young folks is expected to become the largest generation in history. As they do, they’re expected to wield considerable purchasing power, potentially even surpassing millennials and Gen Z.

But here’s where it gets interesting: These kids don’t want toys under the tree this year. Or video games. Or even iPhones.

They want moisturizers, toners, serums, face peels, polishers, sunscreens, scrubs, and just about any skincare product that pops up on their social media feed.

#skincare on TikTok

Social media platforms like TikTok are fueling this premature obsession with healthy skin. Over 80% of Gen Alpha kids are glued to the never-ending stream of addictive, quick-hit videos, where the #skincare hashtag alone boasts 272.9 billion views.

Check out how consumer searches for skincare products are trending at multi-year highs:

Google Trends

Skincare sales were up 10% year-over-year as of September, while the more expensive “prestige” brands are selling at an even higher rate, up 14% over the same period.

Teen spending on skincare products soared an even more impressive 19% this fall, according to the most recent Piper Sandler survey.

Gen Alpha’s affinity for skincare could give beauty retailers an unexpected boost this holiday season, especially as brands specifically cater to this group’s holiday wish list with targeted marketing campaigns.

And that’s what we’re watching here at LikeFolio.

In fact, we’ve already identified two names that could trade higher on the back of strong gift-giving and growing consumer demand for skincare products. (One even has an earnings event coming next week.)

Check out these latest holiday watchlist additions…

Stock No. 1: E.l.f. Beauty (ELF)

On shelves filled with expensive beauty and makeup products, E.l.f. Beauty’s (ELF) products stand out: They’re simply packaged, and more important, they’re affordable.

The value beauty brand has its products on shelves in Target (TGT), Walmart (WMT), and pretty much any other store where you’d normally find makeup.

You’ll find Elf’s products all over social media. In fact, the company has an entire page on its site dedicated to products gone “viral,” including its Power Grip Primer and Halo Glow Liquid Filter, which have amassed hundreds of millions of views on TikTok.


Elf’s latest earnings report (for Q2 Fiscal 2024) revealed impressive figures: Net sales surged by 76% to $215.5 million, marking the 19th consecutive quarter of growth. That was largely fueled by strength in both retailer and e-commerce channels as consumers clamor to keep their makeup bags full.

But keen investors should keep their eyes on Elf’s recently completed acquisition of Naturium, a high-performance skincare brand projected to contribute significantly to the company’s net sales and EBITDA in fiscal 2024.

With Naturium under its belt, Elf updated its fiscal 2024 outlook to account for a 55% to 57% year-over-year increase in net sales – a huge boost from its previously expected range of 37% to 39%.

LikeFolio shows consistent growth for the Elf brand overall, with mention volume rising 27% year over year:

With demand outpacing the stock’s gains, ELF could be a potentially lucrative opportunity for investors.

Stock No. 2: Ulta Beauty (ULTA)

Ulta Beauty (ULTA) is in a unique position as the largest beauty retailer in the U.S., with 1,355 storefronts spanning all 50 states.

It offers hundreds of beauty brands (including Elf) in store and online, but unlike its most direct competitor, Sephora, Ulta stands out by offering drugstore-level options that cater to tighter budget.

We’ve shown you here before how its unmatched Ultamate Rewards loyalty program keeps customers coming back with special discounts, free gifts, early access to new products and deals, free shipping, and more.

For consumers, Ulta’s deals simply can’t be beat.

In the second quarter, we saw that pay off in a 10.1% increase in net sales, reaching $2.5 billion, with a comparable sales increase of 8%.

The company’s diverse product range and strategic initiatives significantly contributed to this growth, including:

  • Strong performance across major categories like skincare, makeup, and hair care, with notable contributions from brands like Bubble, BYOMA, and Beautycounter.
  • Innovative events like the Big Summer Beauty Sale driving sales and market disruption.
  • Double-digit growth in services, emphasizing newer services like ear piercings and keratin treatments.
  • Enhanced digital and omnichannel presence, including virtual try-on tools and mobile app improvements that bolstered customer engagement.

These efforts, alongside a focus on clean, cruelty-free, and inclusive product offerings, have strengthened Ulta’s position in the beauty market.

The company has proven it has a deep understanding of consumer trends and preferences. And LikeFolio data confirms forward-looking momentum.

Buzz growth is diverging greatly from recent stock performance, with consumer mentions climbing a notable 39% year over year:

As Ulta gears up to report earnings next week, the current setup for investors looks tantalizing.

We’ll be watching out for other major beneficiaries in this space, and like always, our paid-up members will be the first to know when a profit opportunity presents itself.

But for now, be sure to add ELF and ULTA to your holiday stock watchlist.

Until next time,

Andy Swan
Founder, LikeFolio

P.S. We’ve delivered four hand-picked winners to our LikeFolio Investor subscribers that have returned 2%, 6%, 12%, and 16%, just since September 27. We’d love for you to join in on the moneymaking this holiday season before we unleash our next trade alert. Click here to learn how, and as a special thank you for signing up, we’ll show you our favorite AI pick under $5.

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