YETI Holdings, Inc. (YETI)

Yeti vs. Newell

Soared 17% last Thursday after a report, going positive for the year after a long slump. Why did they soar while Newell Brands has lagged? Both make discretionary goods at a time when consumers are spending more on services or experiences. Yeti soared during Covid, but fell after. Since last October's market bottom, Yeti has rallied 61%. Revenue growth slowed from 29% in 2021 to 13% in 2022, sales never fell. Yeti's edge over Newell is its coolers. Their gross margins have swung from the high-50s in 2021 to low-50s in 2022, better than Newell's. For 2023, Wall St. projects Yeti's earnings to fall 3% vs. Newell plunging 48%. YETI has a strong balance sheet vs. Newell's $5 billion debt. Yeti never paid a dividend, but Newell's pays a generous one that they had to slash by 70% to 2.6%. That triggered a sell-off by income investors. That said, both companies are buys. Last week, Yeti raised its full-year forecast, especially over the holidays. Newell is a turnarounds tory under new management. The CEO had to slash the dividend. Their last quarter beat top and bottom line, but the CEO lowered guidance for the rest of the year. He thinks that was the last bad quarter, and the last bad quarter is the time to invest in a stock. Also, Newell is laying off 2% of its workforce and automating its warehouses and reducing their brands (they have way too many). Yeti is returning to growth mode at 16.4x PE 2024 vs. Newell's under 10x PE 2024. He prefers Yeti.

It makes high-performance outdoor gear and it reports Thursday. He's been liking this since $16. Closed at $107 today. Loves their products. A pandemic play, but it's much more than that.

A fantastic company. Has built a brand image and brand following. Has massive margins from the brand following. Consumers have tremendous amounts of spending power, since incomes have built up. Easier to sell high end brands. Very easy for competition to come in at decent margins and take away from them. The best days are probably behind them now.

The great outdoors cohort excelled last summer when we were in lockdown and they only thing to do was to go camping, including YETI. This quadrupled from its lows by the end of 2020. They reported a pair of super quarters. Q4 results in February beat top and bottom lines and delivered a bullish forecast when the market was ambivalent about it. Shares sold off 8%, though, but as spring got rolling, YETI shares rose. This past week, they delivered 42% revenue growth and more top and bottom-line beats and raised full-year guidance. Direct to consumer sales were up, and this offers wide margins. They invested in new products. Overseas sales are prospering. The one knock is that the stock if pricey in terms of valuation. Despite that, he sees strong growth.

A drink ware and cooler manufacturing company with a very popular brand. It is now coming into Canada. He expects growth to continue at 15% per year. It trades at a little under 20 times earnings. A great entry point here. Yield 0% (Analysts’ price target is $38.18)

The company is well known in the southern US but unknown in the north and abroad. They started by inventing a super cooler and has diversified into outdoor drinkware and other outdoor products. It has a great online presence. It became public in the fall at $18 and has done very well. Mutiple isn't dirt cheap at 20x earnings. Has huge growth potential. (Analysts’ price target is $28.40)