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Yeti
My approach.
Medical/science background. But I’ve always liked the idea of letting money make more money. Previously used a financial advisor to buy mutual funds for me but realized 5% charge initially and 1% per year to buy a worse performing ETF is the biggest scam since beanie babies. I picked up stock picking 3 years ago. Started out reading a few dozen books and now listen regularly to a few podcasts. Looking for ideas and critiques.
I start with margins and margin trends, ROE and ROI, debt and interest payments, cash flow and cap ex. If those look bad, that’s it. If they look good I keep going.
10k skim. Executive compensation, competition, net promoter score, LTV-CAC, net revenue retention, moat, share count trend and capital allocation. Are you spending 29 billion to acquire afterpay or did you just write some code to add BNPL to your existing app for free. Read about the industry and if I/analysis see growth. Check their website.
Then I’ll project out 5 years using historical margin trends and growth for good and bad scenarios. Multiply by historical PE ranges.
With that I give you why I’m buying $YETI
Gross margin improvement 46-56 (last 4 yrs)
Op margin improvement 10-18%
4 year compounded 22% revenue growth.
Paying down debt (339 mil), only 89 mil left. Now starting buybacks. 100 mil started and finished last quarter. Needs to announce another IMO. Capex to net income 25%. ROE 54. ROI 37%.
Competitive advantage
Brand is cool. Their displays are always top notch with prime placement. Best in class products which gives it a brand moat as long as they maintain quality.
Only 823 total employees. They make 252 k per employee in net income
Comparisons
Callaway golf has 24k employees total and makes 5k net per
Newelll (markers of Coleman ice chest) has 30k employees and makes 24k net per employee
Vista 60k net per employee
Expanding DTC sales as a percent of revenue.
43% female board. Use 100% recycled plastic.
Projections
Great scenario 61% gross margin, maintain the low end of SGA 34% to keep 22% revenue growth avg for 5 years.
Leaves us with 3.81 bil revenue. 990 mil op and 762 mil net. Market cap of 11.4 bil @15 PE and 26.6 bilat @35 PE
Bad scenario revenue slows. Unable to improve margins. 15% revenue growth per year for 5. Gross margin to 58. SGA has to increase to try to improve slowing sales to 39% of revenue.
2.84 bil revenue. 500 mil op. 408 mil net. Which is 6.1B @15 PE and 14.1 B at 35
Wide range of outcomes of course. But using the low end scenario and you a 50% gain to a 350% gain at 5 years. But a best case 7 bagger doesn’t seem out of reach.
None of that assumes more buybacks which I’d prefer they continue instead of M&A.

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