The recent strength in high-end beauty & personal care companies goes against assumptions that consumers are trading down. How should you play it?
Although Procter & Gamble(PG) and Unilever(UL) sales are flat their higher-end rivals are showing surprising strength.
Bare Escentuals (BARE), Estee Lauder (EL), and fragrance maker Parlux(PARL) are all doing surprisingly strong business. In fact Wedbush Morgan recently upgraded Parlux to “Buy” after the company’s new Jessica Simpson fragrance sold out in many stores.
How should you trade?
Look at Alberto Culver (ACV) counsels Jon Najarian. People are buying their higher end products. And I like Bare Escentuals, he adds.
My trade is Avon (AVP), adds Guy Adami. Credit Suisse downgraded the stock a few weeks back but raised their price target.
I like AVP as well, adds Quint Tatro with a stop below $41.
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Trader disclosure: On Aug 26, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Tatro Owns (C), (GS); Quint Tatro Is The Principal Of Tatro Capital; Tatro Capital Owns (QQQQ), (SSO), (SPY), (FXI), (XLF), (IHI); Jon Najarian Owns (C), (EXM), (JPM), (UNG); Jon Najarian Owns (AAPL) Calls, (MRVL) Calls, (RMBS) Calls, (EWH) Calls; Jon Najarian Owns (PTEN) Call Spread; Terranova Owns (AAPL), (RIMM), (EOG), (VLO), (YHOO), (NOV), (KOL), (GS), (POT), (SA), (FCX); Terranova Owns (AIG) Puts
Terranova Is Chief Alternatives Strategist Of Phoenix Investment Partners, Ltd.; Phoenix Investment Partners Owns More Than 1% Of (ABD), (ARE), (BRE), (CNTY), (CLB), (OFC), (DLR), (ESS), (EXR), (FL), (IAT), (IGE), (LNET), (MAC), (OIIM), (PSPT), (DBC), (DBV), (SLB), (SKT), (BLV)
Terranova Is Co-Portfolio Manager Of The Phoenix Diversifier PHOLIO; Phoenix Diversifier PHOLIO Owns (IGE), (DBC), (DBV)