L'Oréal has been moving for years with a discipline that doesn't need big headlines to prove its strength. Its strength stems from an operating model that masters three pillars: continuous innovation, extremely effective global marketing and the ability to set prices even in tense environments. The company has made that formula a standard in the cosmetics industry, and maintaining it for decades is no accident.
When I took a position in it, the thesis rested on the predictability of its organic growth and the stability of its margins, backed by a diversification that few companies in the sector can match. Since then, the stock has been advancing at the pace that characterizes mature, well-managed businesses: without fanfare, but with a progression that tends to reward the investor's patience.
During this time, L'Oréal has continued to strengthen its sales mix, boosting premium categories and relying on increasingly polished omnichannel distribution. That approach has enabled it to sustain a very balanced financial profile: robust margins, solid cash generation and a return on equity that remains an industry benchmark. It's a kind of quality that often seems expensive... until the market comes back to support it.
With that performance, the exit target of around €405 starts to feel consistent. It is not a maximalist figure, but a reasonable level to ensure a cumulative return from entry, in a company whose compounded growth - albeit moderate - remains constant. Even so, the question that accompanies quality companies arises: execute the plan or leave room for the business to continue to unlock value over the long term.
This is the usual tension. On the one hand, crystallizing profits after an orderly run; on the other hand, the risk of selling just before the stock goes on another upward run, something that L'Oréal has proved capable of doing more than once. In any case, the position has served its purpose: to offer stability, sustained appreciation and the peace of mind of being invested in a world leader whose strategic discipline rarely disappoints.
