What Happened?
A number of stocks jumped in the afternoon session after markets rotated into defensive names following the release of the May CPI report.
The headline 4.2% annual inflation reading spooked the market, but the breakdown matters: energy drove more than 60% of May's monthly price increase, while food at home rose just 0.1% and core inflation came in at only 0.2% for the month. For staples companies whose input costs are food, packaging, and household goods that is a margin reprieve.
The World Cup, which kicks off later in the week across U.S., Mexican, and Canadian host cities, added a near-term catalyst. Goldman Sachs has buy ratings on AB InBev, Constellation Brands, and Heineken specifically on tournament beer demand.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Personal Care company e.l.f. Beauty (NYSE: ELF) jumped 6.4%. Is now the time to buy e.l.f. Beauty? Access our full analysis report here, it’s free.
- Shelf-Stable Food company B&G Foods (NYSE: BGS) jumped 5.1%. Is now the time to buy B&G Foods? Access our full analysis report here, it’s free.
- Beverages, Alcohol, and Tobacco company Celsius (NASDAQ: CELH) jumped 3.1%. Is now the time to buy Celsius? Access our full analysis report here, it’s free.
Zooming In On e.l.f. Beauty (ELF)
e.l.f. Beauty’s shares are extremely volatile and have had 36 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 32.6% on the news that the company reported mixed third-quarter 2025 results and issued a disappointing financial outlook.
While its adjusted earnings per share of $0.68 beat expectations, revenue of $343.9 million fell short of analysts' estimates. The main concern for investors, however, was the company's forecast for the full year. Management's guidance for revenue of $1.56 billion and adjusted EBITDA of $304 million, at their respective midpoints, came in significantly below Wall Street's projections.
Adding to concerns, the company's operating margin fell to 2.2% from 9.3% in the same quarter last year. The combination of a revenue miss and a weak forecast that implied slowing growth and profitability prompted a negative reaction from investors.
e.l.f. Beauty is down 24.4% since the beginning of the year, and at $58.80 per share, it is trading 59.9% below its 52-week high of $146.67 from September 2025. Despite the year-to-date decline, investors who bought $1,000 worth of e.l.f. Beauty’s shares 5 years ago would now be looking at an investment worth $2,110.
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