Why Yeti Stock Has Doubled in 2019

Is the stock due for a breather? Or is it time to back up the truck?

Yeti Holdings (NYSE:YETI) has been one of the best stocks of 2019. Already this year, Yeti Holdings stock has risen 113%. Among over 1,800 stocks with a current market capitalization over $2 billion, the  performance of YETI  stock ranks fourth.

Only three biotechs have done better. The performance of Snap Inc (NYSE:SNAP) this year trails that of YETI stock by a tiny amount.

There are two primary reasons for the big gains of Yeti Holdings stock.

The first is that, in retrospect, YETI stock simply was too cheap at the end of 2018. The company went public in October – after pulling a planned IPO earlier last year – which proved to be tough timing for a growth stock. Market-wide worries led YETI down as low as $12.40 in December.

Secondly, Yeti has continued to grow nicely. Its fourth-quarter earnings, reported in February, beat expectations, leading Yeti Holdings stock higher. The company’s 2019 adjusted earnings per share guidance of $0.99-$1.04 suggests that investors could have owned YETI in December for roughly 12 times its expected 2019 EPS. That multiple is far too conservative for a growth stock.

With YETI stock now up over 150% from those lows, however, the question is whether investors are pricing in too much growth. Sales of the company’s coolers are slowing, while its margins might be nearing a ceiling. Luke Lango made a strong case for YETI stock this week, assigning a price target in the high 30s. Given the risks facing the company, however, at $31.50, YETI might need to take a breather.

Why YETI Stock Has Doubled

The main worry about YETI, going back to 2016, when it first filed for an IPO, is that the consumer-products business is a tough one. The growth of high-priced niche products  stall out rather quickly. Investors no doubt had in mind the travails of fallen angels like GoPro (NASDAQ:GPRO) and Fitbit (NYSE:FIT). IP camera maker Arlo Technologies (NYSE:ARLO), which also launched an IPO in 2018, has plunged as well.

But Yeti has eased those worries with its recent performance…

Full story at Investorplace.com