I don't claim to be an expert in cosmetics. But I do have two daughters and a wife and they certainly seem to be looking forward to a post-mask environment where they can apply makeup, suggests Glenn Rogers, contributing editor to Internet Wealth Builder.

In addition to wearing masks less frequently, we will also be going out to dinner and other events much more frequently. All this is great for the cosmetics industry including the retailers and manufacturers who did not exactly flourish during the height of COVID.

In fact, cosmetic sales were down by approximately 50% from their levels prior to the lockdown despite people still trying to look good on Zoom.

Now, there are lots of ways to play this reopening from a beauty point of view. The department stores that are still remaining, with their miles of cosmetics aisles, should benefit.

But for cosmetics manufacturers the lift should be even better. These companies include Estee Lauder (EL), Coty (COTY) and Revlon (REV). Any of these three is worth a look right now. All are well established companies. But there's a smaller brand I want to focus on today. That brand is e.l.f. Beauty Inc. (ELF).

ELF is the smallest of the four companies that I've now mentioned but it caters to a younger crowd with more reasonable prices. It has broad distribution through all the aforementioned department chains along with a decent online business. Many of its products cost $10 or less, which is great for budget minded millennials.

The company doesn’t pay a fortune for high-priced celebrity endorsers but relies on an army of young influencers and word of mouth. ELF will do collaborations with entertainers like Alicia Keys and famously they just did a co-promotion with Chipotle Mexican Grill (CMG). That tells you a little bit about where the brand sits, since it's hard to imagine Estee Lauder partnering up with a fast-food chain.

The brand operates a very strong loyalty program that has over 2.3 million members, up 40% from the prior year. This gives the company a strong recurring sales stream that accounted for 16% of the December quarter revenue.

This is high margin business, which the company continues to grow. Analysts are expecting the stimulus package passed in Congress plus the ongoing reopening to be very good for cosmetic manufacturers in general and e.l.f. in particular.

Despite the pandemic, e.l.f. Beauty delivered net sales growth of 10% when it announced its third quarter results at the beginning of February. That was somewhat of a miracle given that many of its competitors were down as much as 50%. The company's adjusted EBITDA for the quarter was down 14% year-over-year but that’s very good considering the COVID impact.

The company gained 100 basis points of market share in U.S. colour cosmetics and raised its fiscal 2021 guidance. The results represented eight consecutive quarters of net sales growth, even throughout the pandemic. This was in part due to the fact e.l.f. started out as an online brand and this saw it through the worst of the downturn. The stock does not pay a dividend. I like this entire sector and this stock in particular.

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