Is Yeti a Good Investment Right Now?
With Yeti already best-in-class and primed for international expansion, is it time for investors to start considering buying its stock?
May 11, 2022

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Buying stock in a consumer goods company is a risky business. Trends are fickle and there's always a chance a brand will fall out of favor. Think of the rise, fall, and resurrection of Crocs. If you bought its stock during its heyday in 2007, you would have gone through more than a decade of pain and anguish before breaking even in 2021.

However, there are some exceptions to this rule. Sometimes a brand is best-in-class and continues to innovate throughout the ages, maintaining its status. This is helped by good consumer relations, a defendable moat, commitment to quality, and/or a first-mover advantage. Examples of these can be seen in sportswear brands like Nike or Lululemon or high-end jewelry makers such as Cartier or Tiffany & Co.

Today, we'll take a look at one of the more ridiculous examples: YETI (NYSE: YETI).

What does Yeti actually do?

YETI is a manufacturer of expensive, high-quality outdoor products -- mostly coolers and insulated mugs. To be fair to the company, its gear is highly rated and has become somewhat of a status symbol in the fishing, hunting, and camping communities. YETI's famed Rambler mug was called "the Best mug ever made" by Outdoor magazine and its coolers are celebrated for maintaining a lower temperature than all of its competitors.

In order to achieve this, YETI pioneered a process called roto-molding, in which a mold gets rotated as the manufacturer pours the plastic. By doing so, the plastic becomes more uniform in density producing better insulation and durability. A few other roto-molding cooler companies have popped up throughout the years but none seem to do it as well as YETI.

The history of Yeti

YETI was founded in 2006 by brothers Roy and Ryan Seiders. Prior to its launch, they founded, ran, and subsequently sold Waterloo Fishing Rods. While on their fishing adventures, the pair grew frustrated with the quality of coolers on the market so they decided to make their own, resulting in the YETI Sherpa cooler.

For more than six years, this was all YETI made -- one cooler, two color options. Despite this, the quality was so good it attracted committed outdoorsmen and generated $29 million in annual revenue by 2012. The same year, however, the brothers realized they needed some help to scale the business and opted to sell a two-thirds stake to the Cortec Group for $67 million.

Under the guidance of the Cortec Group and experienced CEO Matthew J. Reintjes, YETI has flourished. It has 700 employees, an expanded product line, and $1.4 billion in annual sales.

If we take a look at its 2021 financials, we can see a company firing on all cylinders...

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