Is e.l.f. Beauty, Inc. (ELF) the Best Cosmetics Stock to Buy for 2025?

We recently published a list of 12 Best Cosmetics Stocks to Buy for 2025. In this article, we are going to take a look at where e.l.f. Beauty, Inc. (NYSE:ELF) stands against other best cosmetics stocks to buy for 2025.

Overview of the Cosmetics Industry

According to Grand View Research, the global cosmetics industry has a market size of around $295.95 billion as of 2023. It is expected to grow at a compound annual growth rate of 6.1% between 2024 and 2030. The primary driver of this growth is the rising awareness among consumers about improving their external appearance. Products such as makeup, hair care, skin care, and color cosmetics have become essential parts of everyday life, leading to their increased demand. Another factor supporting market expansion in this sector is the introduction of non-toxic, natural, and organic cosmetic products.

The online cosmetics market is reflecting similar trends. According to a report by Mordor Intelligence, the online cosmetics market had a size of $16.23 billion in 2025. It is expected to grow at a compound annual growth rate of 8.47% between 2025 and 2030, reaching $24.37 billion at the end of the forecast period.

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What Would Trump’s Tariffs Mean for the American K-Beauty Cosmetic Industry?

South Korea takes the lead for cosmetic imports, but a 25% tariff could be imposed on the country if President Trump decides to give the green signal after a 90-day pause on a majority of his new reciprocal tariffs. On April 16, CBS News reported that the US imported more than $7.5 billion in cosmetics last year, according to estimates made by the US International Trade Commission. Around $1.7 billion of these imports came from South Korea, as American retailers are seeing a significant boom in the K-beauty industry with the sale of Korean skincare, hair care, and makeup products. This trend is partly emerging due to social media influencers consistently promoting K-beauty products.

However, the imposition of Trump’s tariffs could result in a significant price hike for these products, which is why consumers are “panic-buying” their favorite Korean products, according to CBS News. These trends are also proving worrisome to the Personal Care Products Council, a trade association representing more than 600 brands such as Estée Lauder, Procter & Gamble, L’Oréal, and Neutrogena.

The association said in a statement that it is particularly “concerned about trade policies that could result in higher prices for personal care products,” adding that US consumers use “about six to 12 products each day, including sunscreen, toothpaste, shampoo, moisturizer, and fragrance.”

Our Methodology

We sifted through stock screeners, financial media reports, and ETFs to compile a list of 40 cosmetics stocks and chose the top 12 most popular among hedge funds as of Q4 2024. The list is ordered in ascending order of hedge fund sentiment. We sourced the hedge fund sentiment data from Insider Monkey’s database.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

e.l.f. Beauty, Inc. (NYSE:ELF)

Number of Hedge Fund Holders: 35

e.l.f. Beauty, Inc. (NYSE:ELF) is a multi-brand beauty company that ranks on our list because of its clean, vegan, cruelty-free, and accessible cosmetics and skincare products. Its brand portfolio includes e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People, and Keys Soulcare. The company’s operations span eye, lip, face, makeup, beauty tools, accessories, and skincare products, all 100% vegan. e.l.f. Beauty, Inc. (NYSE:ELF) takes the eighth spot on our list of the best cosmetics stocks to buy for 2025.

On April 9, Canaccord analyst Susan Anderson opined that the weakness in the company’s shares due to the tariff situation in the country posits a significant buying opportunity. The stock’s shares present a positive risk/reward opportunity after undergoing a fall of approximately -60% YTD because of tariffs and slowing tracked sales. The firm believes that e.l.f. Beauty, Inc. (NYSE:ELF) has a playbook that can absorb the effects of tariffs, aggressively estimating that around 70% of its items are exposed to Chinese tariffs. Canaccord thus maintained its buy rating for the company, setting a $105 price target on Elf Beauty shares.

The company also has strong operations. Fiscal Q3 2025 marked its 24th consecutive quarter of net sales growth and market share gains, ranking e.l.f. Beauty, Inc. (NYSE:ELF) among a rarefied group of high-growth companies. It is one of the only six public consumer companies out of 546 that has grown for 24 straight quarters and averaged at least 20% sales growth per quarter. Furthermore, e.l.f. is the only brand among nearly 1,000 cosmetics brands tracked by Nielsen to gain share for 24 consecutive quarters.

Polen US Small Company Growth Strategy stated the following about e.l.f. Beauty, Inc. (NYSE:ELF) in its Q3 2024 investor letter:

“The Portfolio’s top detractors were Progyny, elf Beauty, and Alarm.com. E.l.f. Beauty, Inc. (NYSE:ELF), a discount beauty company focused on cosmetics and skin care, is a new addition to the Portfolio this quarter. Please see Portfolio Activity below for further detail. We are intrigued by the company’s impressive track record for growth, margins, and returns on capital. While elf has reported significant results all year, shares came under pressure, in our view, as short-term investors primarily appeared to anticipate a slowdown in revenue growth, possibly due to investor concerns of market saturation, economic conditions, and valuation concerns, among other factors. While we are confident in how we underwrote our initial investment for returns above the portfolio average, the stock has come under even more pressure than we anticipated. We used this weakness to add to our position. We’re intrigued by the strength elf has experienced across its retailer and ecommerce channels, particularly in taking market share in a challenging consumer environment, given their relatively inexpensive prices vs. competitors.

Elf Beauty, described above, is a discount beauty company focused on cosmetics and skincare. We find the company’s reputation for quality, innovation, and prices below mass cosmetics brands to be uniquely positioned. While this combination of innovation, quality, and value has led to compelling growth, we still believe it’s early days for the company. Elf’s brand awareness is significantly less than that of more prominent players; it is still adding shelf space, expanding its product portfolio, and entering the skincare market. Elf is also still a US-focused business, with some early signs of international success. The company’s financial profile is strong, and we expect EPS to grow by 25% over the long term.”

Overall, ELF ranks 8th on our list of the best cosmetics stocks to buy for 2025. While we acknowledge the potential for ELF as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ELF but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.