Don’t know anything about makeup? 3 reasons why elf Beauty stock is still a no-brainer buy.

Elf Beauty (ELF -1.47%) carved out a niche in the cosmetics industry and created an incredible brand presence. The company has shown phenomenal growth and demonstrated resilience under pressure, with its stock up 280% over the past three years.

Here are three reasons why it’s still a no-brainer buy.

1. It’s a growth machine

There are few non-tech companies that can match elf’s recent growth. It’s been a strong sales machine that’s been resilient despite inflation, and the loyal and growing fan base continues to buy. It has already established itself as a leading mainstream brand, surpassing legacy brands to claim consumer attention and dollars.

Its low prices attract shoppers all the time, and it has become even more popular as customers who might ordinarily splurge on luxury cosmetics retreat in the inflationary environment. However, its branding is impactful and resonates across demographics, attracting all kinds of shoppers even in better circumstances.

In the first quarter of fiscal 2025 (ended June 30), sales increased 50% year over year and gross margin expanded 0.8 percentage points. Adjusted earnings per share (EPS) were $1.10, and management raised guidance across the board.

At the same time, the color cosmetics industry fell by 1%, sales of pixies increased by 26% and gained 2.6 percentage points in market share, while the mass cosmetics giants lost. While skin care grew by 1.4%, elf grew by 45%. Management is taking the right steps to maintain this by engaging with shoppers online, where they spend time, and leveraging strong e-commerce and wholesale channels to provide a wide range of shopping options.

Even if you know nothing about cosmetics, you will understand this standard model of creating a great product line that speaks the language of its customers and a company that is profitable at scale. Expect a positive cycle as elf continues to expand and build its brand.

2. Just started in international

Elf serves 14 countries outside the US and more through a global e-commerce distributor. International sales make up 16% of the total right now, but were up 91% year-over-year in the first quarter. The potential here is huge as the company is entering new markets and launching products deliberately.

The company recently started selling in Germany with a partner in 1,600 locations, the largest international launch ever. It enters Mexico through a deal with Sephora and expands its presence in the UK, in addition to several other launches and expansions.

There’s good reason to be confident about Elf’s global prospects. He moved from position no. 8 at position no. 4 as a mainstream cosmetics brand in the UK and from number 6 to number 4 in Canada. It is the largest mainstream makeup brand in the Netherlands.

3. The price is right

However, the goblin stock fell after the first-quarter report and is down 21% year-to-date. Despite an excellent first quarter and a high outlook, investors were looking for more. Management is guiding full-year sales of $1.29 billion in the middle, while the average Wall Street estimate is $1.32 billion. EPS estimates were around $3.39, while analysts were looking for $3.52.

Guidance that deviates somewhat from analysts’ expectations is never a good reason to sell a stock, but in this case, the market may be realizing that Elf’s share price is too high. At these expectation levels, some of the earnings are already built into the price, and the stock cannot support too premium a valuation.

Fortunately for investors, the stock is now at a much more acceptable valuation. At the current price, elf shares are trading at a very reasonable 26 times forward one-year earnings. This is a great price for a high growth stock with goblin opportunities and is a deal not to be missed.