An updated edition of the April 17, 2025 article.

The beauty and cosmetics industry has transformed from ancient natural remedies to modern, science-driven skincare and makeup products. Evolving beauty standards and consumer preferences have been shaped by culture, technology and changing social values. Today, the beauty industry is a multi-billion-dollar global market, offering a wide range of products — including skincare, makeup, fragrances and wellness solutions. As trends continue to shift and innovation drives new product development, the beauty sector remains a dynamic force in personal care and self-expression.

In recent years, one of the most significant trends in the beauty industry has been the growing consumer focus on skincare. As more people prioritize healthy, radiant skin, demand has surged for skincare products featuring natural ingredients, clean beauty formulations, and dermatologist-approved solutions. This shift has been further influenced by the global popularity of K-beauty and J-beauty, known for their emphasis on hydration, multi-step skincare routines and effective sun protection. In response, beauty brands are investing heavily in science-backed innovations — such as probiotic skincare, blue light protection creams, and treatments that strengthen the skin barrier —to meet evolving consumer needs.

Sustainability is increasingly shaping the future of the beauty industry. As consumers become more environmentally conscious, there is heightened scrutiny on ingredient sourcing, eco-friendly packaging and brand ethics. Companies that prioritize transparency, cruelty-free practices and sustainable operations are earning greater customer loyalty. A prime example is The Estee Lauder Companies Inc. (EL Quick QuoteEL - Free Report) , which has made significant strides in sustainability through initiatives like refillable packaging and responsibly sourced ingredients. As regulatory bodies enforce stricter standards on labeling and environmental impact, beauty brands that align with these values are well-positioned for long-term growth.

Technology is transforming the way consumers experience and interact with beauty. Innovations like Artificial Intelligence-powered skincare diagnostics, augmented reality virtual try-ons and biotech-infused formulations are revolutionizing product personalization and performance. A growing segment in this space is dermocosmetics, which blends pharmaceutical-grade research with skincare to deliver clinically proven results. The Procter & Gamble Company (PG Quick QuotePG - Free Report) , a global leader in consumer goods, has embraced these advancements by incorporating cutting-edge technologies into its beauty and skincare lines, enhancing both efficacy and user experience. 

As tech-driven beauty continues to evolve, brands leveraging science and innovation are gaining a competitive edge in the market. To that end, we have identified three standout stocks from our Beauty & Cosmetics Screen that are well-positioned to capitalize on these transformative trends. These are Coty Inc. (COTY Quick QuoteCOTY - Free Report) , Ulta Beauty, Inc. (ULTA Quick QuoteULTA - Free Report) and Sally Beauty Holdings, Inc. (SBH Quick QuoteSBH - Free Report) .

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3 Beauty and Cosmetics Stocks to Watch

The beauty industry is experiencing rapid transformation and Coty stands as a dynamic player navigating this evolution with strategic precision. The company is redefining beauty innovation through strategic transformation and consumer-centric growth. As the global beauty industry evolves rapidly, Coty continues to strengthen its core capabilities in Prestige fragrances, skincare, and mass-market innovation. The company is optimizing its product portfolio while accelerating innovation to meet changing consumer preferences. By doubling down on key growth areas and improving agility in its largest market — the United States — Coty is positioning itself as a leading player in the modern beauty landscape.

Prestige fragrances remain a major growth engine for Coty, with new launches and entry-level luxury formats expanding its global reach. The company is tapping into high-potential demographics, including Gen Z, multicultural consumers, and male shoppers, especially in underpenetrated regions. Offerings like body mists and pan sprays help broaden access to premium scents, supporting volume growth and brand relevance. With a blockbuster Prestige fragrance pipeline planned for fiscal 2026—described as the strongest in five years—Coty is poised to reinforce its leadership in fragrance innovation and drive top-line growth.

Coty’s digital transformation and e-commerce expansion are fueling long-term success in beauty and cosmetics. E-commerce now accounts for nearly 20% of total sales, bolstered by a longstanding partnership with Amazon and new initiatives on platforms like TikTok Shop. Coty’s “Agile Beauty” model accelerates product development in response to viral beauty trends, keeping brands like CoverGirl competitive in mass beauty. Backed by investments in AI, automation, and the successful S4HANA migration, Coty is streamlining operations and enabling scalable digital growth. As it balances innovation, sustainability, and market responsiveness, this Zacks Rank #3 (Hold) company is evolving into a diversified beauty powerhouse with strong digital capabilities and growing market share across key beauty categories. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ulta Beauty continues to lead the U.S. beauty retail market through a strategic blend of brand curation, digital innovation, and experiential retail. At the heart of this momentum is the company’s “Ulta Beauty Unleashed” strategy, which focuses on enhancing core operations, accelerating digital transformation, and enriching the customer journey. With exclusive product launches, personalized marketing campaigns, and large-scale activations like the Ulta Beauty World event, the brand is reinforcing its position as more than just a retailer — it’s becoming a lifestyle destination for beauty and wellness enthusiasts across all demographics.

Ulta Beauty’s multi-category growth strategy is driving strong performance across key beauty segments, including fragrance, skincare and wellness. Fragrance remains its top-performing category, bolstered by high-profile launches such as XO Khloe by Khloe Kardashian and inclusive, gender-neutral scent lines. Skincare continues to expand with the addition of trending brands like Tatcha, Naturium, and Anua, as well as growing consumer interest in body care and K-beauty. Meanwhile, the wellness category is scaling quickly with the launch of nine new brands, including health-focused products from Garden of Life and HATCH Mama, aligning beauty with broader lifestyle trends.

A major pillar of Ulta Beauty’s success is its robust loyalty ecosystem and advanced digital capabilities. With over 45 million active loyalty members, the company drives deep customer engagement and retention. Ulta Beauty has significantly strengthened its omnichannel and mobile-first strategy, with app-based innovations like GLAMlab 2.0 for virtual try-ons and AI-powered skin and hair analysis tools creating highly personalized shopping experiences. The newly launched UB Community also fosters deeper customer interaction and brand loyalty. Powered by Adobe-based segmentation and real-time content delivery, Ulta Beauty’s personalized marketing strategy continues to boost conversion rates. As the beauty sector faces increased competition and normalization, this Zacks Rank #3 company remains focused on elevating its digital offerings, expanding its product portfolio, and delivering seamless, tech-driven customer experiences.

Sally Beauty is transforming its business to meet evolving consumer behavior and market challenges through innovation and digital expansion. As economic uncertainty reshapes spending patterns, the company is reinforcing its leadership in the beauty and cosmetics industry with a strategic focus on product innovation, omnichannel retail, and personalized customer engagement. With a strong footprint in both the consumer and professional beauty segments, Sally Beauty continues to invest in its “Fuel for Growth” program, modernizing stores and expanding digital marketplaces. Its ongoing efforts to enhance operational efficiency and meet the needs of both DIY beauty shoppers and salon professionals are central to its growth strategy.

Digital innovation plays a key role in the company’s omnichannel success, particularly through e-commerce partnerships with Amazon, DoorDash, Instacart, and Uber Eats. These collaborations are driving strong online growth, while the company’s “Licensed Colorist On-Demand” platform offers virtual consultations that lead to higher spending and deeper customer engagement. The company is also leveraging AI-powered marketing and customer relationship management tools to improve personalization and increase conversion. These digital initiatives not only enhance the shopping experience but also strengthen Sally Beauty's competitive advantage in a rapidly evolving beauty landscape.

Product innovation and retail reinvention remain central to Sally Beauty’s brand evolution. The company is expanding its portfolio with new launches from owned brands like Bondbar and Inspired by Nature, alongside premium professional products such as K18, Moroccan Oil, and Amika. The company is also revamping its store layouts to support modern beauty trends and shopper preferences and piloting refreshed Sally Beauty store formats that boost cross-shopping and brand storytelling. The company’s Happy Beauty concept is expanding in high-traffic mall locations, focusing on indie beauty, K-beauty, and trending categories like press-on nails. Backed by operational discipline and digital innovation, this Zacks Rank #3 company is well-positioned to drive long-term value and maintain its leadership in the affordable and accessible beauty retail space.