Estee Lauder (EL) is the pre-eminent global leader in prestige beauty. The company has strong brands, market presence and growth potential demonstrated by over 60 years of uninterrupted sales growth. Despite a slowdown in consumer spending in the U.S., earnings are expected to increase 12.5% in fiscal 2009. With the stock trading at the low-end of the historical valuation range, we maintain the Buy rating.

Management is focused on delivering sales and earnings growth by delivering innovative and cutting edge products in the skin care, makeup, fragrance, and hair care categories. Estee Lauder has solid long-term growth prospects in view of its market presence and brand equity. Positive cash flow has allowed management to return value to shareholders through share repurchases and dividends.

Estee Lauder's stock has traded in a P/E range of 15.2 to 33.0 over the last five years. Estee Lauder is an above-average growth company among its peers. Despite the earnings challenges in the early 2000s, the company has continues to exhibit sales growth. Estee Lauder has excellent long-term growth prospects, market presence, and brand equity. The target price of $55.25 is based on a 23 P/E on trailing 12 month earnings.