Investing in a promising growth stock and just letting it sit there can lead to some impressive returns for investors. However, being patient in a growing business is important. It can sometimes take a while for a stock’s value to show any impressive earnings and revenue growth that a company can achieve over the years and the potential it can have.
Another stock that looks amazing and is deeply unstoppable right now Elf Beauty (NYSE: ELF)which has been consistently generating strong growth numbers. With a market capitalization of $7.3 billion, it’s not hard to see how valuable this famous cosmetics company could be in the future.
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When a company grows its business for 23 consecutive quarters, “sustainable” is the one word that comes to mind. And according to elf, its business has not only grown its sales for 23 straight quarters, but has also achieved market share gains. The company’s competitively priced cosmetics are an attractive choice for consumers, now more than ever due to continued inflation and difficult economic conditions.
While the company’s growth rate has slowed in recent years, it is still above the five-year average. And while 40 percent may be a low for elf business, most companies would love to be getting those kinds of numbers.
Unfortunately, the slow growth rate has been enough of a reason to lead to a sell-off in elf’s share price in recent months. But the good news for investors with patience is that there can be more growth in the long term, as the elf is winning over the smaller buyers.
The reason I am optimistic about the future of the company is not only tied to the current results, but also what customers are saying about the business. According to Piper Sandler‘s most recent Taking Stock With Teens Survey, elf is far and away the top cosmetics brand with teenagers in the US. It was rated as the top brand at 35% of youth in the cosmetics category, following the popular brand with a 10% share.
Elf is winning over younger consumers by offering an attractive combination of both quality and price. As those young adults grow with the brand, they have the opportunity to continue using elf products as they grow older.
Elf’s shares have fallen by more than 30% in the past six months as the company’s slowing growth is becoming a growing concern for investors. But achieving more than 40% growth is difficult for any business, especially in an economic environment where consumers have limited purchasing power due to rising prices.