Personal product stocks are often considered defensive plays in a volatile market, because demand is generally non-cyclical. Unfortunately, currency impacts can take a big bite out of earnings, while sluggish sales growth can cause stocks to underperform the market. Today, we'll cut through the losers and discuss two promising plays in the sector -- Unilever (NYSE:UL) and Estee Lauder (NYSE:EL).

Unilever, which is co-headquartered in London and Rotterdam, owns a portfolio of over 400 brands. However, the company mainly focuses on boosting sales of its top 13 brands with annual sales of over 1 billion euros ($1.1 billion) each, which include Dove, Axe, Hellmann's, Knorr, Lipton, Lux, Magnum, and Rexona.

Unilever's brands. Source: Unilever.

Unilever's "underlying" sales -- which excludes currency impacts, acquisitions, and brand disposals -- rose 5.7% annually during the third quarter, up from 2.9% growth in the second quarter. Unilever attributed that growth to a strong ice cream season in southern Europe, a competitor's recall in North America, and the phasing of Latin American sales between the third and fourth quarters. 57% of Unilever's sales come from emerging markets.

Unlike its U.S.-based rival Procter & Gamble (NYSE:PG), Unilever benefits from a stronger dollar because it reports earnings in euros, which have been weak against the dollar for most of the year. Last quarter, currency impacts boosted Unilever's total revenues by 2.9%. Unilever estimates that if exchange rates hold steady, currency tailwinds will add 5% to sales and 2% to its EPS for the full year.

Unilever expects its full-year underlying sales to rise 2% to 4%. By comparison, P&G posted a 12% drop in sales last quarter, with currency impacts accounting for nine percentage points of that decline. P&G's organic growth, which is comparable to Unilever's underlying growth, slipped 2%. In addition to better growth numbers, Unilever's P/E of 24 is also cheaper than P&G's P/E of 28, and comparable to the industry average of 24 for personal product stocks. However, P&G's forward annual dividend yield of 3.5% is slightly higher than Unilever's 3.1% yield.

Estee Lauder
The crowded beauty category within personal products can be a tough one to succeed in. However, Estee Lauder has remained fiercely competitive, thanks to its portfolio of well-established brands like Aveda, Donna Karan, MAC, Bobbi Brown, La Mer, and Clinique.

Estee Lauder's top brands. Source: Estee Lauder.

Last quarter, Estee Lauder's revenues rose 7.6% annually to $2.83 billion, which exceeded estimates by $50 million. Currency impacts reduced overall sales by $198 million. Revenue in the Americas and EMEA (Europe, Middle East, and Africa), its two biggest markets, respectively rose 14% and 8%. Asia-Pacific revenues, which accounted for 19% of its top line, fell 4% due to a "softer retail climate" in China and the MERS impact in South Korea. But looking ahead, Estee Lauder expects new e-commerce partnerships, department store counter openings, and lower import taxes on skin care products to boost sales in China.

All four of Estee Lauder's main product categories -- skin care, makeup, fragrance, and hair care -- posted positive year-over-year growth during the quarter. Gross margins also remained unchanged from the prior year quarter at nearly 80%. Excluding currency impacts, sales are expected to rise 8% to 10% annually in fiscal 2016. On the bottom line, Estee Lauder's net earnings rose 36% to $309.3 million, or diluted earnings of $0.82 per share. Currency impacts reduced earnings by $0.11 per share. Estee Lauder also raised its quarterly dividend by 25% to $0.30, which gives it a forward annual yield of 1.5% at current prices.

Estee Lauder's numbers look solid, but investors should beware of the stock's valuation. With a trailing P/E of about 28, Estee Lauder trades at a premium to both the S&P 500 and the personal products industry. Nonetheless, Estee Lauder remains a "best in breed" stock in the tough beauty products market and a top personal products stock.

The key takeaways
Unilever's and Estee Lauder's recent earnings highlight the significance of currency impacts and the strength of well-known brands. While many growth-oriented investors might ignore personal products stocks altogether, they should note that both stocks have easily outperformed the S&P 500 over the past 12 months.

Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble and Unilever. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.