Cash in on the cult of youth and beauty

By Michael Brush

If the arrival of spring has you wondering whether you might need a little "work" done, you're not alone.

The number of "aesthetic procedures" performed each year has doubled since 2000 in this country. That includes laser treatments that get rid of unwanted wrinkles or tattoos, Botox and breast implants.

Last year, Americans forked out $12.2 billion on more than 11.5 million procedures, according to the American Society for Aesthetic Plastic Surgery. Surprisingly, more than a fifth of these procedures were done on people age 19 to 34. The biggest age group for this kind of treatments is made up of those 35 to 50 years old.

Most cosmetic procedures aren't covered by insurance, but people are willing to shell out big bucks for them anyway. The result is that doctors love to do this kind of work. Profits are higher, since doctors don't have to haggle with insurance companies over pricing or deal with mountains of paperwork.

All this means that the business of cosmetic procedures is spreading beyond the dermatologists and plastic surgeons that traditionally have done this kind of work. Michael Shulman, an analyst at ChangeWave Biotech Investor, estimates the number of doctors offering cosmetic work is increasing 15% a year.

Those doctors aren't the only ones making money from the vanity economy. There are plenty of companies selling potions -- developing drugs and procedures to add beauty to our skin-deep parts. Likewise, there are plenty of ways for investors to get a piece of that action. Here's a look.

Natural remedies

Bare Escentuals (BARE, news, msgs) has offered its all-natural line of cosmetics and skin-care products since opening its first retail shop in San Francisco in 1976. But it's only recently that the appeal of its cosmetics -- thought to be healthier -- has sparked spectacular revenue growth. Sales have advanced 59% a year on average since 2002, to reach $259 million last year.

Goldman Sachs Group (GS, news, msgs) analyst Lori Scherwin thinks Bare Escentuals products will continue to be a big hit, supporting earnings growth of 30% to 35% this year and next. Goldman Sachs recently added the stock to its buy list.

Bare Escentuals products -- which are made from minerals like titanium, zinc and iron oxides -- appeal to women because they don't irritate the skin or clog pores like regular makeup.

In addition to its own boutiques, the company sells through specialty cosmetics chains Ulta and Sephora, which themselves are expanding at a rapid clip. The company is moving into large department stores like Macy's and Nordstrom (JWN, news, msgs) and has big potential abroad, says Lori Wachs, a portfolio manager at Delaware Investments, which owns shares of the stock.

Radio remedies

If zinc oxide isn't enough to cover your crow's-feet, you can always kick things up a notch with a radio-frequency-based collagen treatment offered by Thermage (THRM, news, msgs). The one-time heat treatment works by tightening up strands of collagen that connect skin to underlying bone and muscle, giving the skin a tighter, smoother appearance. Treatments take anywhere from 20 minutes to two hours, and an average face treatment costs $3,500.

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