Putting money into a promising growth stock and letting it sit there can potentially lead to fantastic returns for investors. However, having patience in a growing business is crucial. It can sometimes take a while for a stock’s value to reflect the impressive earnings and revenue growth that the company can experience over the years and the potential it can possess.
One stock that looks impressive and downright unstoppable right now is elf Beauty (NYSE: ELF)which has consistently generated solid growth figures. With its shares still trading at a modest market cap of $7.3 billion, it’s not hard to imagine how this popular cosmetics company could become much more valuable in the future.
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When a company grows its business for 23 consecutive quarters, the one word that certainly comes to mind is “unstoppable.” And according to Elf, the company has not only grown its revenue for 23 consecutive quarters, but also gained market share. The company’s competitively priced cosmetics are attractive options for consumers, now more than ever due to persistent inflation and challenging economic conditions.
Although the company’s growth rate has slowed in recent years, it is still above the five-year average. And while 40% may mean a slowdown for Elf’s business, many companies would like to achieve these kinds of numbers.
Unfortunately, the slowing growth rate was enough to lead to a sell-off in Elf’s share price in recent months. But the good news for patient investors is that there could be much more growth if we take a long-term view as Elf wins over young customers.
One reason I’m optimistic about the company’s future prospects has to do not only with its recent results, but also with what consumers are saying about the company. According to Piper SandlerAccording to the most recent Taking Stock With Teens Survey, Eleven is by far the top cosmetics brand among teens in the US. It was rated as the top brand for 35% of teens in the cosmetics category, with the next most popular brand having only a 10% share.
Elf knows how to convince young consumers by offering an attractive mix of quality and price. As these teens grow up with the brand, they have the potential to continue using elf products as they grow older.
Eleven’s shares have fallen more than 30% in the past six months as the company’s slowing growth worries investors. But achieving growth above 40% is difficult for any company, especially in an economic climate where consumers have less purchasing power due to inflation.
