This Under-the-Radar Move Will Likely Drive e.l.f. Sales and Could Boost the Stock.

Not everything that can drive a stock happens with a big announcement aimed at investors. Sometimes, it can be something pretty subtle and under the radar if you are looking for the right things. That could be the case with e.l.f. Beauty (NYSE: ELF), which recently unveiled new summer products.

So why do I think this could be a big sales driver for e.l.f. Beauty? The first reason is the source of the information, my teenage daughter. Teenagers can actually be a great source for the latest trends impacting brands, and my daughter eagerly told me these new offerings were set to be hugely popular and that Rhode sales were about to skyrocket.

Image source: The Motley Fool.

Second, e.l.f. gradually expanding Rhode's product assortment has always been a big part of my thesis for owning the stock. When e.l.f. Beauty acquired Rhode, the relatively young company was already generating over $200 million in sales from just 10 products available on its website. One easy way to drive sales would be to just add more selections.

Driving sales with the Rhode 2026 summer collection

The company did just that with its summer 2026 collection, which will include three completely new products. The new offerings are a pocket cream bronzer for $25, a double-ended pocket makeup brush for $27, and a highlight milk luminizer for $28. It also launched limited-edition shades of its Peptide Lip Tint ($20) and limited-edition merchandise, including a beach bag ($36) and plush towel ($50). On top of that, its popular iPhone cases also got two new limited-edition colors (between $38 and $46).

Notably, Rhode is a much more premium brand than e.l.f.'s namesake brand and comes at much higher price points. As you can see from these prices, most Rhode products cost well north of $20, but e.l.f. products typically cost well below $20. This price gap also means that Rhode's products have much higher gross margins than e.l.f.'s.

Rhode also has a major built-in advertising engine, led by founder Hailey Bieber, who has nearly 58 million followers on Instagram. Bieber has been teasing the launch for four months, building up a lot of demand for the new products.

The Rhode growth story for e.l.f. is just beginning, and right now, the company appears to be doing a great job with the brand. In addition to expanding its product assortment, e.l.f. has a huge opportunity to increase its distribution into new retail outlets in the coming years.

With the stock trading at only a forward P/E of 16, this is a great growth stock to buy on the cheap, with a nice potential catalyst ahead.

Geoffrey Seiler has positions in e.l.f. Beauty. The Motley Fool has positions in and recommends e.l.f. Beauty. The Motley Fool has a disclosure policy.