3 Perfume Stocks Profiting From The Pandemic-Fueled Perfume Boom

0

Source: Galina F / Shutterstock.com

Over the past two years, the boom in fragrance sales would have come as a major surprise to most. You probably weren’t thinking of perfume stocks.

With lockdown restrictions in place, makeup and beauty sales have dropped dramatically. However, fragrance sales have continued to grow during the pandemic and are expected to continue growing at a healthy pace for the foreseeable future.

According to market research firm NPD, fragrance sales increased by 45% in 2021 compared to the previous year. In addition, the performance was 18% higher than in the first quarter of 2019. According to Larisa Jensenthe Vice President of the NPD Group, the rise to prominence was unlike any she had seen in her career.

Perfumes were an affordable luxury during the pandemic, which severely impacted consumers’ purchasing power. On top of that, perfumes were a source of escape for people during the dark times brought on by the pandemic.

Perfume sales are expected to continue growing this year, which is why perfume stocks remain an attractive buy. Here are three you should probably place your bets on.

  • Estee Lauder (NYSE:EL)
  • Beauty Ulta Inc (NASDAQ:ULTA)
  • Inter Parfums, Inc. (NASDAQ:IPAR)

Stocks of perfumes to buy: Estee Lauder (EL)

An Estee Lauder retail store at the Elements shopping mall in Hong Kong.

Source: Sorbis / Shutterstock.com

Estee Lauder is one of the leading cosmetics giants operating some of the most popular brands in the world. Moreover, it has constantly acquired stocks of promising cosmetics to further expand its massive market share. EL stock has been an incredible performer over the past decade, comfortably outperforming the S&P500.

After its slump during the pandemic, the company is turning against all cylinders. Year-over-year growth in revenue and EBITDA is huge, at 25% and 53% respectively. Those numbers are head and shoulders above its five-year average results.

Makeup sales have been declining for the past couple of years, but the results for this segment have also started to pick up lately. Over the past two years, fragrances, in particular, have seen sales grow by 29% on an organic basis. New launches supported the growth of its fragrance division, which stands out.

Demand for its hair care and makeup segments also grew by double digits during the fourth quarter compared to the year-ago period. Expect Estee Lauder to keep rolling its competition for the foreseeable future.

Ulta Beauty (ULTA)

ULTA Stock Ulta Beauty store front sign located in downtown Laurel in Laurel, Maryland.

Source: Ryan P. Stephans / Shutterstock.com

Ulta Beauty is one of the leading operators of beauty retail chains in the United States. It sells skincare, cosmetics, fragrances and other related products in its sprawling number of stores across the country. Its finances have been solidly in the green for several years, marked by strong margins and growing cash flow.

The beauty-focused company has achieved impressive performance over the past year. Perhaps its most notable metric is its EBITDA growth, which has soared more than 144% in the past year. Revenue growth was excellent, with healthy growth across all of its divisions. Perfume sales represent 12% overall sales and have grown faster than other divisions over the past two years.

Additionally, the company’s financial flexibility is exceptional, with incredible asset turnover and free cash flow growth. These elements make ULTA one of the strongest bets in the cosmetics industry.

Stocks of perfumes to buy: Inter Parfums (IPAR)

An image of the Inter Parfums (IPAR) website.

Source: chrisdorney/ShutterStock.com

Inter Parfums is an American fragrance giant that operates some of the most iconic brands in its segment. It operates an asset-light business where it is basically a marketer and distributor for most of its brands. Some of the brands in its portfolio include Coach, Kate Spade, Jimmy Choo and others.

The perfume giant has had a stellar 2021 with multiple releases. Most of its product releases in 2020 have been delayed to 2021, and the company has taken advantage of pent-up demand. Net sales increased 60% year over year.

A few months ago, his direction guided the 2022 company turnover range between $925 and $950 million. Judging by his recent performances, he can easily reach such high numbers.

As of the date of publication, Muslim Farooque had (neither directly nor indirectly) any position in the securities mentioned in this article. Opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines

Share.

Comments are closed.