YETI Holdings, Inc. (YETI)

It trades at 12X forward earnings or cash flow. In the past they have over-performed or under-performed giving an average of 15%. The main core business is mature with a 60% margin. It is trading like an ex-growth consumer products company, but the rest of the business is growing at 15% or higher. It has very high margins which is good for growth. Tariffs have been an issue but he thinks they have worked through it. He is looking for a big increase in the stock price with a substantial increase in earnings.         Buy 6  Hold 13  Sell 0

It rallied 4% today, perhaps by a market sensing that Harris will win the election. YETI sources 40% of its goods from China, which is a target of tariffs if Trump wins. YETI was selling off until today.

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.