Many investors are looking at shares of Ulta Beauty Inc. (NASDAQ:ULTA) today for a few reasons. The company opened a new location in Pennsylvania, Cleveland Research downgraded ULTA from 'Buy' to 'Neutral', and Jim Cramer said that he "wouldn't sell it at its current price level, but he wouldn't double down either."
We're eyeing shares of ULTA for another reason - hemp beauty and skincare products. Hemp, the non-psychoactive brother of marijuana, has a plethora of applications from paper to plastics. One of those uses happens to be skincare products thanks to hemp being rich in naturally occurring vitamins and minerals.
Hemp products were a $688 million industry in 2016, and it's growing at a rapid rate. Meanwhile, the skincare products market generates over $10 billion per year in the United States alone, and the worldwide market is expected to grow to $135 billion by 2021. As these two markets have finally intersected, it's no wonder that Ulta Beauty is hopping on the train to carry these products in-store as well as online.
A quick search on the Ulta e-store for "hemp" comes up with 90 products! These skincare products don't get you high (although there are topical creams that do so), but they do moisturize, nourish, and soothe. From lip balms to deep conditioners, they have hemp products for everything.
At higher price points than their non-hemp counterparts, it wouldn't be surprising if this trend led to slightly higher revenues, and (depending on margins) a fatter bottom line.
Sure, the company sells thousands of products. And yes, hemp products are a small percentage of Ulta's overall sales. With that being said, the point of this article was to point out this growing consumer trend towards hemp-based products. If they weren't popular, there's no way there would be nearly 100 different hemp products on their website.
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