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L’Oreal looks good on investors

L'Oreal advertising banner image with Blake Lively

L’Oreal was founded in 1909 and, through a mix of acquisitions and aggressive advertising tactics, has grown into the world’s largest cosmetics company with over 500 brands. With sales accelerating, margins widening and the global cosmetics market looking increasingly attractive, we think L’Oreal looks destined for more success. Read on to find out why we think it’s worth paying up for this quality company.

For young adults, appearance is more important than health – so says a wave of research coming out of the psychology departments of universities, particularly in the US. That might be a depressing reflection of a modern society brainwashed by the impossibly good looks of airbrushed supermodels, but it has also created a goldmine: the beauty industry.

In 2017, the global cosmetics market was valued at roughly $532bn (£409bn) and it is expected to reach $806bn by 2023, registering a compound annual growth rate of 7% between 2018 and 2023. It’s an industry which is dominated by a small handful of key players – just eight companies own the top 200 cosmetics brands – and leading the pack (as has been the case for more than a century) is L’Oreal (EPA: OR).

Founded in Paris in 1909 as a specialist hair dye manufacturer, the French giant now owns over 500 products across both the consumer and professional subsets of the industry. These…

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