The Zacks Cosmetics industry has been glowing on consumer’ increased spending on beauty products, which has helped it rally 49% in a year, comfortably beating the S&P 500’s gain of 15.5%. Well, the industry (ranked among the top 48% out of more than 250 Zacks industries) has been riding on solid performances by renowned players like The Estee Lauder Companies Inc. EL and Nu Skin Enterprises, Inc. NUS – which scaled new highs during yesterday’s trading session.

Constant innovations, product launches and effective selling and marketing initiatives have long been favoring Estee Lauder and Nu Skin. Buoyed by such endeavors, these stocks have broken their own 52-week high records multiple times – including yesterday when they hit highs of $152.02 and $75.24, respectively. Closing trade at $151.48 and $75.05 eventually, the respective stocks have surged 79.5% and 38.7% over the past year.

That said, let’s have a deeper insight into the growth story of these stocks individually.

 Can Estee Lauder Surge Higher?

This cosmetics giant has been reporting strong results across most geographic regions and product categories, banking on strategic acquisitions, strong online business and effective management policies. Incidentally, Estee Lauder has made several strategic acquisitions to enhance its portfolio. The past acquisitions of BECCA and Too Faced have been strengthening its fastest growing prestige portfolio and contributed nearly 2 percentage points to sales in the second quarter of fiscal 2018. Further, the company has been constantly undertaking digital initiatives such as online booking for each store appointment, omni-channel loyalty programs and advanced mobile services. These initiatives have been boosting the company’s online sales for a while, which is expected to be a major growth catalyst in the upcoming years.

Courtesy of these factors, along with solid cost savings and considerable strength in travel retail business, the Zacks Rank #3 (Hold) company marked its 14th consecutive quarter of earnings beat, while sales kept its positive surprise trend alive for the fourth straight time in the second quarter. Management expects continued growth opportunities in the global prestige beauty industry, which is anticipated to grow 5% in fiscal 2018. All these growth drivers, along with expected gains from the recently enacted tax reforms keeps management encouraged about continuing with its above-industry improvement in the second half and fiscal 2018. This was well reflected in the raised sales and earnings outlook for fiscal 2018, and the favorable third-quarter view. These factors were enough for analysts to turn more constructive about the stock, as evident from the solid upward estimate revisions for the third quarter and fiscal 2018.

How’s Nu Skin Placed?

Nu Skin has been benefiting from its three-key growth strategy: platform, products and programs, with each component delivering solid growth. To this end, the company has been focused on leveraging social selling networks, which helped its customer base improve 8% year over year in the last reported quarter. Further, the company remains committed toward innovation and product launches to suit consumer needs and thereby expand market share. This is evident from its plans to roll out LumiSpa in several markets during the first half of 2018, given the successful preview of the former last year. Additionally, the company remains encouraged about its Velocity program, which is a rewards plan aimed to motivate sales leaders to enhance their performance. Clearly, Nu Skin’s three-key strategy revolves around solidifying consumer base and augmenting top line.  

Notably, the Zacks Rank #3 company remains encouraged about the prospects of this strategy across all regions such as the Americas, South Asia Pacific and EMEA, while it remains particularly impressed with the progress in China. Based on this strength, the company projects revenues to grow about 7-9% in 2018, including favorable currency impacts. Also, Nu Skin — that has surpassed earnings estimates in three out of the past four quarters — envisions earnings per share to lie in a band of $3.45 to $3.55 in 2018. In 2017, the company reported earnings of $2.36 per share, while earnings adjusted for tax reforms came in at $3.23 per share. We believe these factors and Nu Skin’s shareholder-friendly moves should continue boosting investors’ sentiment. Incidentally, the company recently raised its dividend from 36 cents to 36.5 cents per share, which marked its 17th straight year of dividend hike.

All said, we expect these cosmetic players to continue adding new leaves to their growth stories – a sentiment which gets rekindled by their long-term growth rates. Markedly, Estee Lauder has long-term earnings per share growth rate of 13%, while that for Nu Skin currently stands at 10.1%.

Looking for More Promising Bets? Check These

Inter Parfums IPAR, with a long-term growth rate of 12.3% carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

Kimberly-Clark KMB, also carrying a Zacks Rank #2, possesses a long-term growth rate of 7.9%.