Are you looking to invest in the beauty and cosmetics industry? There are two well-known companies, e.l.f. Beauty and Estée Lauder, that you should consider. While both companies operate in the same industry, they target different customer bases, have different price points, and vary in their geographic reach.
e.l.f. Beauty, which stands for “Eyes, Lips, Face,” caters to a younger, budget-conscious demographic. Their customers are primarily Gen Z and Millennials who appreciate the brand’s affordability and accessibility. On the other hand, Estée Lauder’s core customers skew older and have higher disposable incomes. Estée Lauder is positioned as a luxury brand, emphasizing premium, high-quality ingredients and targeting consumers seeking prestige products.
When it comes to price points, e.l.f. offers products priced between $3 to $15, focusing on delivering value and accessibility. In contrast, Estée Lauder’s products are priced higher, starting around $40 and going upwards of $200, especially for skincare products, reflecting their luxury positioning.
While e.l.f. has been expanding globally, with a strong presence in the U.S. market, Estée Lauder has a larger global footprint, with significant revenues coming from Asia and Europe. Despite their different demographics and operating results, both companies are trading at about 30 times forward earnings estimates.
So, how can you potentially trade the differences between these two companies? One strategy is to make a bullish bet on e.l.f. by utilizing a call spread like the $115/$135. This spread can help reduce risk and potentially increase profits. On the other hand, if you want to make a bearish bet as a pair trade against a long e.l.f. trade, you could consider selling an upside call spread in Estée Lauder.
Before making any investment decisions, it’s crucial to consider seeking advice from a financial or investment advisor. At Extreme Investor Network, we provide valuable insights and strategies to help you navigate the world of investing. Stay informed and make educated investment decisions by following our expert advice.