In this article, we explore the top 11 hair care stocks to consider for investment. For a deeper dive into more options, check out our article on the 5 Best Hair Care Stocks to Buy Now.
The global hair care market is projected to grow at a compound annual growth rate (CAGR) of 6.6% over the next five years. The pandemic’s impact has led to significant changes in consumer behavior, as individuals are increasingly adopting new self-care routines and engaging in do-it-yourself (DIY) beauty practices. This shift has resulted in a substantial rise in DIY hair coloring. Furthermore, the demand for natural, organic, cruelty-free, and vegan hair care products is on the rise due to heightened accountability in the beauty industry, bolstered by celebrity endorsements and increased consumer awareness. Manufacturers are responding by investing heavily in research and development to enhance their offerings, incorporating organic and clean-label ingredients in their products, including shampoos, conditioners, organic hair oils, and hair masks. These innovative products are expected to see robust growth from 2022 to 2027.
Dandruff is a widespread issue that can lead to hair loss, which may also stem from various factors such as genetics, hormonal shifts, and aging. In the United States alone, approximately 70 million individuals experience some form of hair loss. By the time they reach 35, two-thirds of men will have lost some or all of their hair, and the same affects about 50% of women in the country. Scalp conditions like psoriasis also contribute significantly to the demand for hair care solutions. The global hair care market was valued at $82.3 billion in 2022, with the IMARC Group anticipating it to reach $107.2 billion by 2028, reflecting a CAGR of 4.4% from 2023 to 2028. This growth highlights the vast potential within the hair care sector.
To capitalize on this burgeoning industry, consider investing in some of the best hair care stocks like The Estée Lauder Companies Inc. (NYSE:EL), Ulta Beauty, Inc. (NASDAQ:ULTA), and The Procter & Gamble Company (NYSE:PG).
Our Research Methodology
We compiled the following list of hair care stocks by analyzing overall hedge fund sentiment towards each company. This assessment utilized Insider Monkey’s database of 920 elite hedge funds tracked through the end of the third quarter of 2022. The ranking is based on the number of hedge fund holders for each stock, providing insight into investor confidence.
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Explore the Best Hair Care Stocks to Invest In Today
11. L’Oréal S.A. (OTC:LRLCY)
Number of Hedge Fund Holders: 2
L’Oréal S.A. (OTC:LRLCY) is a prominent French company specializing in the production and sale of cosmetics for both men and women across the globe. The firm operates through four main divisions: Consumer Products, L’Oréal Luxe, Professional Products, and Active Cosmetics. Its extensive product range includes shampoos, hair care items, skin care products, hair dyes, styling aids, deodorants, sun care products, makeup, and fragrances. Recently, on October 20, L’Oréal S.A. (OTC:LRLCY) stock saw an uptick following the announcement of robust Q3 sales, driven by strong demand for cosmetics and consumer goods. The French beauty powerhouse reported revenues of €27.94 billion, a significant increase from €23.19 billion the previous year.
On December 1, Citi analyst Cedric Besnard raised L’Oréal S.A. (OTC:LRLCY) to Neutral from Sell, with a new price target of EUR 365, up from EUR 355. The analyst highlighted that the recent devaluation of the stock is sufficient to shift focus onto the company’s relative stability as the market environment worsens. He pointed out that L’Oréal S.A. (OTC:LRLCY)’s valuation has returned to a more normalized state.
According to Insider Monkey’s third-quarter database, Ken Fisher’s Fisher Asset Management holds the largest position in L’Oréal S.A. (OTC:LRLCY), with 12.45 million shares valued at $805.6 million. This positions L’Oréal S.A. (OTC:LRLCY) among the top hair care stocks for investors interested in the sector.
Similar to The Estée Lauder Companies Inc. (NYSE:EL), Ulta Beauty, Inc. (NASDAQ:ULTA), and The Procter & Gamble Company (NYSE:PG), L’Oréal S.A. (OTC:LRLCY) stands out as one of the best options for hair care stock investments.
Here is a summary of what ClearBridge Investments International Growth ACWI ex-U.S. Strategy had to say about L’Oréal S.A. (OTC:LRLCY) in its Q4 2021 investor letter:
“Economies in Asia are taking a contrasting approach to stimulus, with China reducing its reserve requirement ratio for banks to bolster its economy. Japan’s government passed a substantial stimulus bill following a contraction in the third quarter. Despite these efforts, the sentiment in these regions remains largely negative. Nonetheless, we continue to observe strong consumer demand in Asia, which has positively impacted our luxury and cosmetics holdings, including L’Oreal.”
10. Natura &Co Holding S.A. (NYSE:NTCO)
Number of Hedge Fund Holders: 3
Natura &Co Holding S.A. (NYSE:NTCO), founded in 1969, is headquartered in São Paulo, Brazil, and specializes in manufacturing, distributing, and selling cosmetics, fragrances, and personal hygiene products. The comprehensive product portfolio of Natura &Co includes body care, facial care, makeup, soaps, hair care products, deodorants, oils, and more. Recently, on November 10, the company announced a Q3 net income of R$560 million alongside revenues of R$9 billion. This impressive performance showcases the company’s resilience and growth potential in the cosmetics sector.
On October 19, JPMorgan analyst Joseph Giordano upgraded Natura &Co Holding S.A. (NYSE:NTCO) to Overweight from Neutral, setting a new price target of $8, up from $7. The analyst expressed growing confidence in Natura &Co Holding S.A. (NYSE:NTCO) over recent months, emphasizing that management is implementing initiatives aimed at improving results and enhancing shareholder value.
According to Insider Monkey’s data, 3 hedge funds held positive positions in Natura &Co Holding S.A. (NYSE:NTCO) as of the end of September 2022, a slight decrease from 6 funds in the previous quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP is the largest stakeholder of the company, with 1.04 million shares valued at $5.70 million, indicating strong investor interest.
9. Nu Skin Enterprises, Inc. (NYSE:NUS)
Number of Hedge Fund Holders: 13
Founded in 1984 and headquartered in Provo, Utah, Nu Skin Enterprises, Inc. (NYSE:NUS) is known for developing and distributing a wide variety of beauty and wellness products globally. With a diverse array of hair care solutions, Nu Skin Enterprises, Inc. (NYSE:NUS) is recognized as one of the premier stocks in the hair care sector. Recently, the company distributed a quarterly dividend of $0.385 per share to its unitholders on December 7, reflecting its commitment to shareholder returns.
On December 20, DA Davidson analyst Linda Bolton Weiser raised the price target on Nu Skin Enterprises, Inc. (NYSE:NUS) to $40 from $34 while maintaining a Neutral rating on the shares. This indicates a positive outlook for the company despite the challenges in the market.
According to Insider Monkey’s third-quarter database, Nu Skin Enterprises, Inc. (NYSE:NUS) was included in 13 hedge fund portfolios, an increase from 12 in the previous quarter. Jim Simons’ Renaissance Technologies holds the leading position in the company, with 2.5 million shares valued at $84.8 million, showcasing significant investor confidence in this stock.
8. Olaplex Holdings, Inc. (NASDAQ:OLPX)
Number of Hedge Fund Holders: 18
Established in 2014 and based in Santa Barbara, California, Olaplex Holdings, Inc. (NASDAQ:OLPX) specializes in manufacturing and selling a variety of hair care products, including shampoos and conditioners designed for treatment, maintenance, and protection of hair. On November 9, Olaplex Holdings, Inc. (NASDAQ:OLPX) reported Q3 non-GAAP earnings per share of $0.11, with revenues reaching $176.45 million, surpassing Wall Street expectations by $0.01 and $0.2 million respectively. Despite a slight reduction in the full-year 2022 sales outlook, the figures still remain promising compared to market consensus, positioning Olaplex Holdings, Inc. (NASDAQ:OLPX) as a strong contender in hair care investments.
On November 16, Canaccord analyst Susan Anderson initiated coverage of Olaplex Holdings, Inc. (NASDAQ:OLPX) with a Buy rating and an $8 price target. She noted that while the company has encountered some challenges recently, she remains optimistic about future growth prospects as the company continues to invest in expanding its market presence.
Insider Monkey’s data indicates that 18 hedge funds were bullish on Olaplex Holdings, Inc. (NASDAQ:OLPX) at the end of Q3 2022. Brett Barakett’s Tremblant Capital holds the largest position in the company, comprising 1.90 million shares valued at $18 million, reflecting strong support from the investment community.
Here is what ClearBridge Mid Cap Growth Strategy mentioned about Olaplex Holdings, Inc. (NASDAQ:OLPX) in its Q3 2021 investor letter:
“Within the capital markets, the U.S. initial public offering (IPO) market remained active, with $27 billion in deals during the third quarter. While significant secondary offerings from private holders impacted selected equities, we were selective in the new issue market, participating in the IPO of Olaplex Holdings in the consumer staples sector. Olaplex is a marketer of hair care products targeting a vast consumer market where it has yet to penetrate significantly. The company possesses a differentiated business model driven by a patented “bond building” ingredient, a dedicated stylist community, and a robust social media presence that surpasses its mass channel competitors, alongside a fully outsourced operational model that resembles licensing.”
7. Sally Beauty Holdings, Inc. (NYSE:SBH)
Number of Hedge Fund Holders: 20
Sally Beauty Holdings, Inc. (NYSE:SBH) operates as a specialty retailer and distributor of professional beauty supplies, based in Texas. The company provides a wide range of beauty products, including hair color and care items, styling tools, skin care products, cosmetics, and more for retail customers and salon professionals through both physical stores and digital platforms. For the full year of 2022, the company anticipates comparable sales growth in the low single digits compared to the previous year, driven by advancements in key categories, sales shifts from store closures, expanded Regis distribution, and new strategic initiatives. Sally Beauty Holdings, Inc. (NYSE:SBH) is considered one of the most promising hair care stocks for investment.
On December 15, Piper Sandler analyst Korinne Wolfmeyer initiated coverage of Sally Beauty Holdings, Inc. (NYSE:SBH) with an Overweight rating and a $15 price target. The analyst noted that with the company’s transformational phase nearing its end, Sally Beauty Holdings, Inc. (NYSE:SBH) is well-positioned to achieve consistent comparable sales growth and margin expansion over the long term, presenting an attractive opportunity for investors.
According to Insider Monkey’s database for the third quarter, 20 hedge funds held long positions in Sally Beauty Holdings, Inc. (NYSE:SBH), with total stakes valued at $165 million, an increase from 18 funds in the prior quarter with stakes worth $104.3 million. Ken Fisher’s Fisher Asset Management is the largest position holder in the company, owning 3.5 million shares valued at $44.7 million, underscoring the stock’s appeal among institutional investors.
6. Helen of Troy Limited (NASDAQ:HELE)
Number of Hedge Fund Holders: 23
Helen of Troy Limited (NASDAQ:HELE) is a leading provider of consumer products across various regions, including the United States, Canada, Europe, the Middle East, Africa, Asia Pacific, and Latin America. The company operates through three segments: Home & Outdoor, Health & Wellness, and Beauty. Its diverse product range includes decorative hair accessories, shampoos, liquid hair styling products, treatment and conditioning solutions, and hair appliances. On October 5, Helen of Troy Limited (NASDAQ:HELE) announced Q3 non-GAAP earnings per share of $2.27, along with revenues of $521.4 million, surpassing Wall Street expectations by $0.06 and $2.33 million, respectively, indicating strong operational performance.
On December 22, DA Davidson analyst Linda Bolton Weiser upgraded Helen of Troy Limited (NASDAQ:HELE) to Buy from Neutral, raising the price target to $126, up from $115. The analyst believes that the stock is approaching an “inflection point,” as IRI data suggests a promising performance when the company releases its upcoming earnings report.
Insider Monkey’s data reveals that 23 hedge funds held bullish positions in Helen of Troy Limited (NASDAQ:HELE) by the end of Q3 2022, a notable increase from 20 in the previous quarter. Dmitry Balyasny’s Balyasny Asset Management ranks among the prominent stakeholders of the company, possessing 208,481 shares valued at $20 million. This reinforces Helen of Troy Limited (NASDAQ:HELE) as a notable name in the hair care investment landscape.
Wedgewood Partners provided the following insights regarding Helen of Troy Limited (NASDAQ:HELE) in its Q3 2022 investor letter:
“Helen of Troy Limited (NASDAQ:HELE) faced challenges during the quarter as the company continues to navigate various headwinds. Although the healthcare and housewares segments thrived during the pandemic, both we and the company anticipated a normalization of demand. Moreover, the post-pandemic adjustments of demand patterns at major clients like Walmart, Target, and Amazon have further affected the company, both fundamentally and in terms of market sentiment, leading to stock valuation pressures. Additionally, record-high inflation in essential consumer goods has redirected spending away from discretionary items provided by Helen of Troy. Despite these challenges, the company has managed to retain most of the business gained during the pandemic, with revenues in the most recent quarter 26% higher than the same quarter two years prior. We find the current stock valuation to be extremely attractive, reminiscent of levels seen during the 2008-2009 recession when the company was under previous management.”
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Disclosure: None. 11 Best Hair Care Stocks to Buy Now is originally published on Insider Monkey.
