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Sephora is a well-known beauty retailer, recognized for its vast selection of cosmetics, skincare, haircare, and fragrance products. Established in France in 1969, Sephora has grown into a global presence, boasting over 2,600 stores across 35 countries. The company is lauded for its pioneering approach to beauty retail, offering customers a unique shopping experience that blends top-tier products, expert guidance, and interactive technology.
Sephora is not a publicly traded company on its own. This brand is a subsidiary of the French luxury conglomerate LVMH (PAR:MC) (Moët Hennessy Louis Vuitton SE). Therefore, if you want to invest in Sephora, you would need to buy shares of LVMH, as that is the company that owns Sephora. Or as an alternative, you can have a look into e.l.f. Beauty, Inc. (NYSE:ELF) or Ulta Beauty Inc (NASDAQ:ULTA).
Step-by-Step Guide to Investing in Beauty Retailer Company Stocks:
After identifying a suitable alternative to Sephora for investment, you can begin placing trades by following these simple steps:
Step 1: Choose the brokerage company
To start investing, you will need a brokerage account. There are many brokerage companies on the market. However, they differ in the broker's commission, the number of markets available for investing, the complexity of the platform, and the ease of opening an account.
A brokerage account is an investment account that allows you to buy and sell a variety of investments, such as stocks, bonds, mutual funds, and ETFs.
To make the right choice, you should compare the fees, conditions, and how easily you understand the platform and the brokerage company's concept.
Using eToro as an example, we will show how you can open such an account:
- Register your account here. Registration is free, after it, it is not necessary to start investing immediately. You can first use this account to practice with a virtual portfolio eToro demo account.
- Provide your personal details, such as your name, email address, and a password for your account.
- Verify your email address by clicking on the link sent to you in an email from eToro.
- Enter additional information, including your date of birth, address, and phone number.
- Upload a copy of your government-issued ID (such as a passport or driver's license) and a proof of address (such as a utility bill or bank statement) to verify your identity.
- Fund your account using a variety of payment methods, such as credit/debit cards, bank transfer, or e-wallets.
Step 2. Conduct Your Own Research to Create a Strategy
After deciding which stocks to buy—whether it's the parent company LVMH Moët Hennessy or other alternatives—the next step is researching the company.
This step is necessary to understand whether this company fits your financial goals. For such research to give good results, following questions should be considered:
| Checklist |
|---|
| What is the company's history, and how has it performed in the past? |
| What are the risks associated with investing in the company? |
| How does the company compare to its competitors? |
| What is the company's strategy for growth? |
Check the company's annual and quarterly reports, balance sheets, and income statements. Consider industry trends, competition, management, and macroeconomic conditions. Review analysts' opinions, but remember that exact future prices are unpredictable. Stay updated with the latest news and investor opinions.
Avoid these mistakes:
| Investment Mistake | |
|---|---|
| Chasing hot stocks | Investing based on hype or short-term trends without evaluating the company's long-term fundamentals can negatively impact investment returns |
| Overlooking risks | Ignoring the potential risks involved in investing in a particular stock or market can result in unforeseen losses |
Step 3. Decide How Much to Invest and Assess Your Risk Tolerance
To understand how much you want to invest, you must analyse your financial possibilities:
- Risk tolerance: This measures how much risk an investor is willing to take. Some prefer high-risk for higher returns, while others choose low-risk to preserve capital. It’s influenced by financial situation, goals, and personal preferences.
- Goals: These are the objectives an investor aims to achieve, such as building wealth, generating income, preserving capital, or specific plans like saving for retirement or education. Clear goals help in making better investment decisions.
- Time horizon: This is the period an investor plans to hold an investment—short-term (less than a year), medium-term (one to five years), or long-term (more than five years). It affects risk levels and expected returns.
Before choosing the investment amount and frequency of contributions, ensure you have an emergency fund covering 3-6 months of living expenses and a budget for your investing strategy. It is vital to be ready emotionally as well. A "cold head" is the best helper.
Step 4: Place Your Trade
Once you've decided how much to invest in your chosen company's shares, you can place your order:
- Market Order: Buys or sells stocks at the current market price, typically executed quickly.
- Limit Order: Buys or sells stocks at a specified price or better, providing more price control but may not execute if the price isn't reached.
Choose the order type based on your investment strategy, risk tolerance, and goals. Consider market conditions and stock volatility before placing your order.
Step 5. Monitor Your Investment Regularly (Set a Stop-loss)
Regular monitoring allows you to stay informed about performance and make necessary adjustments, while a stop-loss order helps limit losses by automatically selling a stock if it falls below a certain price.
Avoid overreacting to short-term market fluctuations, as the stock market can be volatile with short-term dips before rebounding.
Regularly review your investment strategy to ensure it aligns with your goals and risk tolerance, adjusting as needed to meet your needs. Understanding potential risks is crucial for informed decision-making.
| Risk Type | Description |
|---|---|
| Market Risk | Involves general market movements affecting investment values |
| Credit Risk | Pertains to the issuer's ability to make payments |
| Liquidity Risk | Relates to the ease of buying or selling investments |
| Diversification Risk | Involves balancing the spread of investments |
| Emotional and Behavioral Risks | Can lead to impulsive decisions |
| Company-Specific Risk | The potential for individual companies to face challenges affecting stock value |
Diversify within your portfolio to mitigate these risks effectively.
Disclaimer: This article is not intended as investment advice. Investing involves risk, and your capital may be at risk.
