Love Makeup? You Can Invest in Cosmetics and Beauty Companies
Do you love makeup and beauty products?
I’ve never really been a makeup person, but I love watching makeup tutorials. It’s such an art! I don’t have a makeup collection and will be more apt to pay someone to do my makeup. I just don’t have the patience or skill to do good makeup, but as I’m watching these videos, I started thinking about the cost of these products. For many, their makeup collections can cost upwards of $1000 or more. And since I talk about money here, what happens if you also invest in beauty companies for every product beauty product you buy?
Disclaimer: This post is for educational purposes only. There is risk AND reward in investing in individual stocks. The point is to offer a perspective on consuming products vs. owning potential appreciating assets.
At the end of this post, I share my go-to makeup in case you are looking for a sustainable, minimalist option.
This post contains affiliate links. See disclosures for details.
An Investment Palette
Makeup and beauty products typically depreciate the moment you open it. They expire and it’s hard to get your money back on them. If you use them, then you can get your dollar’s worth, but for many of us, some of our makeup languishes at the bottom of our drawers especially if we have a lot of options to choose from. That’s just the nature of a consumer product. Today though I want to introduce you to the concept of buying beauty and cosmetic stock for every cosmetic product you buy. The goal is to buy assets that have a potential to appreciate which means money in your pocket for the future.
In the image below is a list of beauty companies that you may know or are interested in. You’ll have to do some research to figure out which brands you want to own. Don’t forget the giants of L’Oréal, Unilever and Procter & Gamble whose products you probably already have in your bathroom. Remember that the value of this brand grows if their consumers continue to see them as valuable. If you are a makeup geek, you’ll know more than me what brands are trending and doing well.
Keep in mind too that as we emerge from lockdown and we get back to normal post pandemic, we will be going out more and seeing more people which fundamentally changes the way we consume. Will makeup and cosmetics brands get a lift from this? As you think about how our lives will change, consider changing your consumer habits to include investments in cosmetics and beauty companies.
A short list of publicly traded companies that sell beauty products.
A comparison of the stocks in the first image for the past 5 years. Data pulled from Google Finance on Dec 24, 2020.
The Ulta Story
I’ve been following the company Ulta for a few years now. I used to live by one and always wondered what kind of store it was. One year, they did a very big (read: expensive) reno of their store. They had money and was very surprised to find that Ulta had very strong growth. For those not familiar, Ulta is a beauty chain store that carries cosmetics and skincare brands, men's and women's fragrances, nail products, bath and body products, beauty tools and haircare products. It’s very similar to Sephora, but they sell more budget-friendly beauty brands, while Sephora offers more luxury brands.
Ulta debuted on the NASDAQ on October 2007 at $32, as of this writing, it’s stock price (NASDAQ: ULTA) closed at $324 on March 4, 2021. That’s a 913.75% growth. Can you imagine if all of your makeup purchases appreciated that much?
Ulta Beauty stock growth since it debuted in 2007.
Side note: Sephora is part of the LVMH luxury conglomerate so if you are a Sephora shopper, you can take a look at LVMH which trades on the Paris stock exchange. Here’s a guide on how to buy it.
Ulta has been a darling in the industry for it’s wild growth and it’s hard to tell if it will continue to grow over time so you’ll have to do your own research. This is just an example of how investing in beauty company can reap rewards. Of course, the opposite can be true. Some beauty companies like Revlon have declined over time so they may be ripe for a refresh which can potentially increase it’s stock price in the future.
Collecting Appreciating Beauty Assets
One of the upsides of investing in beauty companies is the potential for the asset to appreciate. So consider buying a stock of a cosmetic and beauty brand for each purchase of a new makeup set that you get in 2021. You’ll have to do some research to figure out which brands you want to own and note that many brands are owned by the same company so if you use specific ones, see if they fall under an umbrella company. From there, you can search online “is company XYZ?” publicly traded to find out.
You’ll make money in 2 ways: increase in value of stock and dividend payout. Not all companies issue dividends but some do which means you’ll get a share of profits back to purchase more stocks or cash out (former is recommended).
If you’re not into investing in individual companies, how about investing in an exchange traded fund (ETF). You can head to ETF Stock Finder to find what ETFs include a specific beauty company stock.
Not sure what some of these terms means, check out our post Resources for the Beginner Investor.
If you’re very new to managing your money, check out The Money Journal which can help you get more accountable with your money which can lead to more savings and more money to invest.
As for me, I don’t spend a lot of money on makeup. I have a very minimal makeup routine. Here’s what I use. I opt for a minimal, sustainable, multi-function products and I found those in 2 products from Iris & Romeo. Here’s a full review. To get 20% off of your order at Iris & Romeo (affiliate link), order here.
Iris & Romeo Best Skin Days - a 5-in-1 serum, moisturizer, sheer coverage, sunscreen, and blue light/pollution protector
Iris & Romeo Power Peptide Lip Balm - a 3-in-1 lip balm that hydrates, plumps and adds color
Maybelline Eraser to cover up some under eye circles
First Aid Beauty is committing to help you with your student loans. Enter at fab-aid.com
Also, side note, if you are a First Aid Beauty brand fan, they are committing $1 Million to help you pay your student loans. You can read more about it and enter here. It requires sending a 2 minute video about how student loans have impacted your life. You never know right?
Love Makeup? You Can Invest in Cosmetics and Beauty Companies
Photo by Jazmin Quaynor on Unsplash
