An updated edition of the February 26, 2025 article.
The beauty and cosmetics space has evolved from ancient natural remedies to today's advanced, science-backed skincare and makeup solutions. Beauty standards and preferences have changed over time, shaped by cultural influences, technological innovations and shifting societal values. Now a multi-billion-dollar global industry, beauty continues to redefine self-expression and personal identity through a diverse range of products — from skincare and makeup to fragrance and wellness. With continuous innovation and consumer-centric trends, the beauty sector remains at the forefront of lifestyle and personal care.
One of the most notable shifts in recent years is the growing consumer preference for skincare. As the desire for healthy, glowing skin increases, there's a rising demand for products that incorporate natural ingredients, clean formulations and dermatologically approved solutions. This shift has been amplified by the influence of K-beauty and J-beauty, which focus on hydration, multi-step routines and sun protection. As a result, brands are increasingly investing in science-backed innovations such as probiotic serums, blue light defense creams and skin barrier-supporting treatments.
Sustainability is also shaping the future of beauty. With consumers becoming more environmentally conscious, there is heightened scrutiny of ingredient sourcing, product packaging and brand ethics. Companies that emphasize transparency, cruelty-free practices and sustainable operations are gaining loyalty. A notable example is e.l.f. Beauty, Inc. ELF, which has successfully combined affordability with vegan, cruelty-free products to capture a broad consumer base. As regulatory bodies push for more rigorous standards in labeling and environmental accountability, brands aligning with these values are positioned for lasting growth.
At the same time, technology is redefining how consumers experience and engage with beauty. From Artificial Intelligence-powered skincare analysis to augmented reality virtual try-ons and biotech-enhanced formulations, innovation is driving personalization and performance. The emergence of dermocosmetics — where pharmaceutical-grade research meets skincare — has fueled the growth of clinically effective beauty solutions. Nu Skin Enterprises, Inc. NUS, a pioneer in science-based skincare and wellness, has made significant strides in this space by integrating advanced technologies into its product offerings.
As the beauty industry evolves, companies prioritizing innovation, sustainability and digital engagement are poised for success in this fast-growing market. To that end, we have identified three standout stocks from our Beauty & Cosmetics Screen that are well-positioned to capitalize on these transformative trends. These include The Estee Lauder Companies Inc. EL, Coty Inc. COTY and Ulta Beauty, Inc. ULTA.
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In the rapidly evolving beauty industry, The Estee Lauder Companies is undergoing a transformative shift through its forward-looking "Beauty Reimagined" initiative. This strategic evolution is rooted in a renewed focus on consumer-centricity, agility and innovation. With a clear objective to reclaim its leadership position, the company is aligning its extensive brand portfolio with emerging consumer behaviors, accelerating digital engagement, and expanding into high-growth markets to ensure long-term, sustainable growth. As part of this transformation, The Estee Lauder Companies has broadened its presence in digital commerce. A key milestone in this journey is the launch of nine of its beauty brands on Amazon’s U.S. Premium Beauty store. This move underscores its commitment to strengthening its reach across high-demand digital platforms.
The company is also harnessing the power of AI to enhance efficiency and improve decision-making. By leveraging AI for demand forecasting and production planning, EL has achieved greater forecast accuracy and optimized inventory management. The use of AI is being scaled across product development, marketing, and supply chain functions, enabling faster processes and deeper innovation across the board. The Estee Lauder Companies recently partnered with Adobe to boost its digital marketing capabilities through the integration of Adobe Firefly, a generative AI tool.
Furthering its commitment to AI innovation, the company joined forces with Microsoft to launch an AI Innovation Lab. This partnership leverages generative AI to accelerate product development, identify emerging trends and enhance consumer experiences across its global brand portfolio. In addition, a digital asset management system upgrade is underway to streamline content production and accelerate campaign execution. These efforts are enhancing agility and opening up new opportunities for creative exploration.
Strengthening its innovation pipeline beyond digital advancements, The Estee Lauder Companies has established a BioTech Hub in Oevel, Belgium, focused on the production and fermentation of bio-based ingredients for its luxury skincare brands. This facility is set to boost in-house capabilities while fostering collaboration within Europe’s growing biotechnology ecosystem. Through these bold and strategic initiatives, this Zacks Rank #3 (Hold) company is not only adapting to the dynamic beauty landscape but actively shaping its future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Coty is carving out a leadership position across the global cosmetics and personal care landscape through strategic innovation, brand revitalization and digital-first engagement. Known for its heritage in prestige and mass fragrances, the company is leveraging its century-long legacy to stay ahead of evolving consumer trends. Fiscal 2025 is proving to be a transformative year, with Coty demonstrating agility in operations and marketing. The company’s commitment to digital innovation and category diversification continues to fuel its long-term growth strategy. A key enabler of this transformation is its investment in emerging technologies and AI, including the successful migration to S4HANA. This upgrade is enhancing operational efficiency through automation and standardization, laying a solid digital foundation for future scalability.
While fragrance remains Coty’s largest revenue driver, with standout performance from brands like Burberry, Hugo Boss and Marc Jacobs, the company is also rapidly expanding its footprint in color cosmetics and skincare. Viral product launches like CoverGirl Outlast Lipstain and Yummy Gloss Plumper, as well as Rimmel’s Better Than Filters foundation, have gained strong traction through influencer marketing and social media engagement. Coty's “Agile Beauty” strategy allows it to bring on-trend innovations to market at unprecedented speed, keeping its brands relevant in a competitive space. These efforts are strengthening Coty’s position in mass beauty and helping it outperform legacy competitors globally.
With e-commerce now representing nearly 20% of sales, the company’s digital strength is enabling market share gains across online platforms. These strategic moves — combined with ESG leadership and operational excellence — underscore Coty’s evolution from a fragrance-centric company to a diversified beauty powerhouse driving innovation across all key categories. At present, COTY carries a Zacks Rank #3.
Ulta Beauty continues to transform the beauty retail landscape through strategic innovation, customer-centric initiatives and bold expansion plans. Amid rising competition and rapidly evolving consumer preferences, the company remains anchored to its mission of harnessing the power of beauty to unlock personal potential. In 2024, ULTA introduced its ambitious “Ulta Beauty Unleash” plan, focused on three core priorities — driving core business growth, scaling new high-potential ventures and realigning operations for future resilience. As part of this initiative, Ulta Beauty launched 40 new brands, including exclusive offerings like XO Khloe, WYN BEAUTY and Charlotte Tilbury, while also relaunching its private-label Ulta Beauty Collection to better meet customer expectations.
A major pillar of the company’s success lies in its award-winning loyalty program, which reached an all-time high of 44.6 million active members by the end of 2024. This powerful engagement engine strengthens customer retention and cements Ulta Beauty’s role as the go-to destination for beauty enthusiasts. Enhancing the customer experience, it has advanced its digital and omnichannel capabilities, with its mobile app and website offering intuitive, tech-forward features. Tools like GLAMlab 2.0, which enables virtual makeup try-ons, and AI-driven skin and hair diagnostics provide hyper-personalized, interactive shopping experiences.
Looking ahead, Ulta Beauty is strategically scaling new business verticals to fuel long-term growth. The company is deepening its entry into the wellness category with a dedicated commercial team and plans to introduce at least 20 new wellness brands focusing on nutrition, mindfulness and sleep solutions. ULTA is also preparing to launch a curated, invitation-only digital marketplace in late 2025, designed to expand product variety while minimizing inventory risks. Global expansion is also underway, with confirmed plans to enter Mexico and the Middle East. Together with enhanced personalization, an evolved Ulta Beauty Media platform and strengthened brand partnerships, these strategic moves position this Zacks Rank #3 company to maintain its leadership in the beauty category and deliver sustainable growth in an increasingly dynamic retail environment.
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The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report
Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report
Nu Skin Enterprises, Inc. (NUS) : Free Stock Analysis Report
Coty (COTY) : Free Stock Analysis Report
e.l.f. Beauty (ELF) : Free Stock Analysis Report
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