Baloncici My original thesis on buying The Estée Lauder Companies ( NYSE: EL ) was a variant of the dogs of the Dow theory, though they are not one of the 30 stocks in the Dow Jones index. In 2023, Estée Lauder lost 40% of its market value, coming off a poor 2022. That price movement alone is obviously not a reason to buy or sell a company, but it was a filter to assess whether a company's stock might be selling at a discount.
I like buying companies that have durable competitive advantages that are discounted. It's great when the reason that a company is discounted is market-specific and there's no turmoil within the company, but that doesn't happen every day. I would love to have that type of patience, but I'm not a market timer, and waiting for the perfect market opportunity could leave me on the sidelines for many bull runs.
I believe it is better to be fully invested than try to time it perfectly. As a result, many of the companies I buy have some issues that I deem as temporary in nature. For Estée Lauder, I happened to be reviewing a list of the worst returns in the S&P 500 for the past two years and was surprised to see a company that I had always thought of as a blue-chip quality company on this list.
Here's the 5-year chart, which shows the performance since the end of 2022: EL 5 Year Chart (Seeking Alpha) As a result, I decided to look further into Estée Lauder and see if this was a stock worth buying. Estée Lauder is a diversified beauty products company.
