Saturday, March 21, 2009

Making money in cosmetic stock - ?

I’m more than likely an idiot, but I was at an outdoor mall today and every girl and woman from age five up was wearing makeup. We’re in a depression (recession). Yet women still have funds to wear makeup and go to beauty parlors, or whatever they call them today? Even pre-tweens (I invented a new term).

Cosmetics and beauty products are not my area of expertise, but I’m always keeping my antenna out for making profits in stock trading.

Looking at the makeup sector of stocks, if it was any other sector, like restaurants, energy or power, I’d run like hell.

Yet I go back to my idiot response that everyone is wearing it. It’s like Twitter. If everyone is doing it, it must be bringing in money. A question on LInkedin revealed the opposite. It appears companies are investing time on utilizing Twitter, but no one is making money from it.

But to wear makeup, you must purchase it. Not so with Twitter.

Revlon is down from its five year high of nearly $40 to just above $2 and still falling. Why isn’t every fiber of my being yelling, no, no, no?

I will admit I’m twitterpated here. When I walk by a MAC counter, or the Scottsdale Mall store, the most gorgeous women are there. The ones working there and others getting makeup put on (maybe that’s the secret, nobody buys, they get it put on like the cheap guys put men’s perfume on at the stores). It doesn’t matter. The most gorgeous women in town seem to be at MAC.

Estee Lauder, a huge conglomerate, owns MAC. Its stock is around $23, near its five year low of just under $20, hit recently. Its five year high is nearly $60. Either it’s a buy or I’m an idiot – and the jury is definitely out on that one.

Look at the originator of modern makeup, Max Factor. It is owned by the 21st Century equivalent of AT&T. When I worked for AT&T – before the 1984 divestiture – it owned the world, literally. No one told it what to do. It spent money like there was no tomorrow. AIG is a boy scout compared to the way AT&T spent money when it was the only game in town.

Max Factor is owned by Procter and Gamble. Yes, they do own everything you put on and in your body, including Tampax to toilet tissue. They do razors, dog food, batteries and tons of shampoos.

I hate companies that diversify like this. It’s like buying mutual funds when you buy their stock. PG stock is at a five year low around $45 from a five year high of $75. I have a term for these type of companies. I call them the Willy Loman (main character in Arthur Miller’s “Death of a Salesman.” Blogging is educational. I read that book in the sixth grade, 10 years after it was published – okay so in literature I was precocious. Didn’t everyone read Shakespeare in the seventh grade?) company – trying to be everything to everyone.

So if you go out and buy any of these stocks (Revlon looks the best) remember you’ve done it listening to an idiot. All the charts have sunk to unheard of low levels (except PG). As I said, all logic says run, but there’s that MAC counter emotion saying, “oooh yeah.”

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