3 Reasons Yeti Holdings (NYSE:YETI) is a Buy

Wednesday, June 9, 2021 | Sean Sechler
3 Reasons Yeti Holdings (NYSE:YETI) is a BuyPeople that spend a lot of time in the great outdoors instantly recognize the value in the high-quality products that Yeti Holdings (NYSE:YETI) has to offer. Whether it's hunting, fishing, riding on a boat, or just grilling food outside, people need products that they can rely on time and time again to hold up well against the elements. Yeti has built a brand that quickly became the gold standard in outdoor and recreation products, which is a big reason why the stock has rallied over 450% since its IPO debut back in 2018.

Investing in growing companies that have carved out a unique niche in their respective industries can be a recipe for long-term success, regardless of what type of company you are buying. That’s exactly the case with Yeti Holdings stock and there are several reasons why it’s a buy at this time. Let’s take a deeper look at this standout leisure products company below.

Brilliant Branding

As we alluded to earlier, Yeti Holdings is special because it’s a company that perfectly understands its customer base and has created a memorable and instantly recognizable brand. The Austin, TX-based company was founded by two outdoorsy brothers that were unhappy with the coolers on the market, so they decided to create one that was essentially indestructible and could keep their catches, kills, and beverages cold for hours. Yeti has since evolved into a company that sells coolers, drinkware, outdoor accessories, and apparel under the Yeti brand.

Yeti’s flagship products are its soft and hard coolers, which carry a hefty price tag and are “designed to handle the paces of a rugged life in the wild and still keep ice for days”. Even the smaller hard coolers for the company retail for around $250, nearly quadruple the cost of most competitors. You might be wondering how this company is able to sell its products at such a mark-up, and the answer is simple – brilliant branding and effective marketing. Yeti brought on the former Global Chief Marketing Officer of Calvin Klein back in 2019 and has created a brand that stands out to anyone interested in outdoor recreation. These coolers have become a status symbol for outdoorsmen all over the country, and the company's knack for marketing its products is a great reason why the stock could be a nice addition to your portfolio.

Direct-to-Consumer Sales Growth

Another strong reason to consider adding shares of Yeti Holdings at this time is the immense growth in the company’s direct-to-consumer sales. More and more companies are using DTC strategies to connect and interact with their customers on deeper levels. The major benefit here is that companies can create loyal repeat customers by using direct-to-consumer sales, as businesses are able to control the entire customer experience since they don’t have to rely on using third-party vendors.

Yeti recently reported Q1 earnings that saw direct-to-consumer channel net sales increase by 59% to $126.8 million, confirming that this strategy is gaining traction. The company’s DTC channel also grew to 51% of net sales and helped to provide Q1 net sales growth of 42%. Direct-to-consumer sales channels are also a plus because they help to improve profit margins since the company doesn’t have to pay retailers to sell its products. Yeti Holdings saw its gross margin reach 59% in Q1, which is better than competing consumer retail brands like Nike.

Breaking Out to New Highs

Many investors think that buying a stock after it has dipped significantly is the smartest approach to opening new positions. While it's true that buying the dip near key support levels can be a profitable strategy, investors should not overlook the power of buying stocks that are making new 52-week and all-time highs. That’s the case with Yeti Holdings, which is breaking out of a period of consolidation after the company’s stellar Q1 earnings release.

Buying a stock when it's breaking out to new highs might seem intimidating, but the truth is that it can lead to significant gains. Since there is no overhead resistance, a stock like Yeti Holdings is poised to continue rallying during a period of "price discovery", especially since it has been consolidating for a few weeks. It could only be a matter of time before Yeti is a $100 dollar stock since it continues to make new highs, which is another solid reason to consider adding shares at this time.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
YETI (YETI)1.7$94.97flatN/A47.02Buy$86.75
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