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YETI is the drinkware giant, but Stanley is catching up fast

• January 26, 2024

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We analyze CB Insights revenue data to evaluate leading players in the drinkware market.

Drinkware is hot right now.

Demand for the Stanley tumbler is particularly high — so high that the release of limited-edition versions has stirred up mayhem at Target locations across the US.

Within drinkware (e.g., coolers, tumblers, etc.), however, YETI is the market leader doing 2x the revenue of Stanley.

But Stanley is  growing at a 79% CAGR.

YETI, on the other hand, is growing at a 14.8% CAGR.

Meanwhile, YETI’s valuation stands at $4B, and its stock has trended down since highs hit in late 2021. Its revenue growth was also minimal in 2023.

So while YETI remains the market leader, keep an eye on Stanley.

More From Forbes

Yeti leans into community marketing to drive growth.

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Yeti uses its brand ambassadors to create community among its core customers driving deeper loyalty ... [+] of its outdoor enthusiasts.

Yeti’s marketing continues to involve the customer community, elevating the brand and deepening engagement with its core consumers. In the recent campaign, Mapping the Gaps , Yeti ambassadors are hitting their favorite unmapped trails worldwide with a GoPro and a cooler. The ambassadors will then share the 360-degree footage to Google Maps for the rest of the world to access via street view for the first time. Staying true to its brand ethos, the company wants to inspire others to get out into the wild and explore these trails.

Making The Outdoors More Inclusive

“The outdoors can be intimidating and may not always feel accessible for everyone, so we believe it’s important to search for new opportunities to leverage unexpected platforms in creative ways to help break down some of these barriers,” said Paulie Dery, CMO for Yeti. “Our hope is to encourage more people to get out and explore the Wild and maybe even inspire some to map a few new trails of their own.”

Conrad Anker, Yeti ambassador, believes the Map the Gaps initiative is both educational and useful ... [+] by providing previously unseen trail views for outdoor enthusiasts

Through this initiative, Yeti can highlight the use of its new Hopper Soft Coolers with its ambassadors as they film and explore the great outdoors. Outdoor enthusiasts can explore the Beehive Basin Trail near Big Sky, Montana, with the legendary mountaineer and climber Conrad Anker as an example. “Map the Gaps is a fun way to introduce people to the outdoors. The combination of maps and hiking is useful and educational. I'm basically stoked about all the cool stuff I get to do with Yeti,” explained Conrad Anker, Yeti ambassador.

Authentic Community Building

Bringing into play the ambassadors, a core element of the Yeti marketing flywheel, allows consumers to see products and world-class outdoor enthusiasts in action. The other goal of Map the Gaps is to showcase the plethora of unmarked trails worldwide. “If only a few trails have available information, then people end up on the same few trails. They become crowded, and it’s not good for the trail or your experience. So if more are available, it can help spread people out,” said Steph Davis, Yeti ambassador.

The idea also inspires and builds community between Yeti and its consumers through the ambassador program. Yeti communities have expanded from only two in 2006 (fishing and hunting) to 15 in 2023, including more diverse categories such as culinary, skate, rodeo, and golf. Yeti has 200 brand ambassadors.

Best High-Yield Savings Accounts Of September 2023

Best 5% interest savings accounts of september 2023, financial earnings show strong growth in dtc.

Yeti continues to leverage its marketing and ambassador programs to drive growth throughout the company. The direct connection to its core customer base has been highly successful. Direct-to-consumer (DTC) sales were up 14% for the third quarter results. In less than ten years, Yeti has progressed from earning 8% of its revenue from DTC to 59% in 2023.

The intentional shift from wholesale to DTC has allowed the company to understand its core customers better and deliver relevant marketing information and products to the target markets. “Last quarter, we discussed the debut of our every single-use campaign, showcasing our product durability and contrasting Yeti to single-use disposable alternatives,“ said Matt Reintjes, president and CEO of Yeti, on a recent earnings call. Reintjes explained that the campaign was so successful that it was expanded internationally across major metropolitan markets and 18 college campuses. “This is one example of the impactful and nuanced way in which we walk consumers from awareness to consideration to purchase and repeat,” said Reintjes.

"We hate single-use plastics and are on a mission to remove them from the world," said Paulie Dery, ... [+] CMO for Yeti. The Every Single Use campaign was very successful and struck a chord with Yeti's customer base.

DTC helps grow gross margins and deliver more to the bottom line. The gross margin outlook for the full year is 56.5% compared to last year at 52.7%. “We delivered remarkably strong gross margin expansion of nearly 650 basis points, highlighted by the ongoing recovery of inbound freight costs and favorable product costs. This result further supports our efforts to stay on offense with brand and growth investment while also taking care of the bottom line,” said Reintjes. Community marketing serves Yeti’s core customers, drives deeper brand loyalty, and strengthens the bottom-line profits.

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What Is an Investment Thesis?

• Understanding the Thesis

Special Considerations

• What's Included?

The Bottom Line

• Portfolio Management

Investment Thesis: An Argument in Support of Investing Decisions

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

The term investment thesis refers to a reasoned argument for a particular investment strategy, backed up by research and analysis. Investment theses are commonly prepared by (and for) individual investors and businesses. These formal written documents may be prepared by analysts or other financial professionals for presentation to their clients.

Key Takeaways

• An investment thesis is a written document that recommends a new investment, based on research and analysis of its potential for profit.
• Individual investors can use this technique to investigate and select investments that meet their goals.
• Financial professionals use the investment thesis to pitch their ideas.

Understanding the Investment Thesis

As noted above, an investment thesis is a written document that provides information about a potential investment. It is a research- and analysis-based proposal that is usually drafted by an investment or financial professional to provide insight into investments and to pitch investment ideas. In some cases, the investor will draft their own investment thesis, as is the case with venture capitalists and private equity firms.

This thesis can be used as a strategic decision-making tool. Investors and companies can use a thesis to decide whether or not to pursue a particular investment, such as a stock or acquiring another company. Or it can be used as a way to look back and analyze why a particular decision was made in the first place—and whether it was the right one. Putting things in writing can have a huge impact on the direction of a potential investment.

Let's say an investor purchases a stock based on the investment thesis that the stock is undervalued . The thesis states that the investor plans to hold the stock for three years, during which its price will rise to reflect its true worth. At that point, the stock will be sold at a profit. A year later, the stock market crashes, and the investor's pick crashes with it. The investor recalls the investment thesis, relies on the integrity of its conclusions, and continues to hold the stock.

That is a sound strategy unless some event that is totally unexpected and entirely absent from the investment thesis occurs. Examples of these might include the 2007-2008 financial crisis or the Brexit vote that forced the United Kingdom out of the European Union (EU) in 2016. These were highly unexpected events, and they might affect someone's investment thesis.

If you think your investment thesis holds up, stick with it through thick and thin.

An investment thesis is generally formally documented, but there are no universal standards for the contents. Some require fast action and are not elaborate compositions. When a thesis concerns a big trend, such as a global macro perspective, the investment thesis may be well documented and might even include a fair amount of promotional materials for presentation to potential investing partners.

Portfolio management is now a science-based discipline, not unlike engineering or medicine. As in those fields, breakthroughs in basic theory, technology, and market structures continuously translate into improvements in products and in professional practices. The investment thesis has been strengthened with qualitative and quantitative methods that are now widely accepted.

As with any thesis, an idea may surface but it is methodical research that takes it from an abstract concept to a recommendation for action. In the world of investments, the thesis serves as a game plan.

What's Included in an Investment Thesis?

Although there's no industry standard, there are usually some common components to this document. Remember, an investment thesis is generally a proposal that is based on research and analysis. As such, it is meant to be a guide about the viability of a particular investment.

Most investment theses include (but aren't limited to) the following information:

• The investment in question
• The investment goal(s)
• Viability of the investment, including any trends that support the investment
• Potential downsides and risks that may be associated with the investment
• Costs and potential returns as well as any losses that may result

Some theses also try to answer some key questions, including:

• Does the investment align with the intended goal(s)?
• What could go wrong?
• What do the financial statements say?
• What is the growth potential of this investment?

Putting everything in writing can help investors make more informed decisions. For instance, a company's management team can use a thesis to decide whether or not to pursue the acquisition of a rival. The thesis may highlight whether the target's vision aligns with the acquirer or it may identify opportunities for growth in the market.

Keep in mind that the complexity of an investment thesis depends on the type of investor involved and the nature of the investment. So the investment thesis for a corporation looking to acquire a rival may be more in-depth and complicated compared to that of an individual investor who wants to develop an investment portfolio.

Examples of an Investment Thesis

Portfolio managers and investment companies often post information about their investment theses on their websites. The following are just two examples.

Morgan Stanley

Morgan Stanley ( MS ) is one of the world's leading financial services firms. It offers investment management services, investment banking, securities, and wealth management services. According to the company, it has five steps that make up its investment process, including idea generation, quality assessment, valuation, risk management , and portfolio construction.

When it comes to developing its investment thesis, the company tries to answer three questions as part of its quality assessment step:

• "Is the company a disruptor or is it insulated from disruptive change? 
• Does the company demonstrate financial strength with high returns on invested capital, high margins, strong cash conversion, low capital intensity and low leverage? 
• Are there environmental or social externalities not borne by the company, or governance and accounting risks that may alter the investment thesis?"

Connetic Ventures

Connetic Adventures is a venture capital firm that invests in early-stage companies. The company uses data to develop its investment thesis, which is made up of three pillars. According to its blog, there were three pillars or principles that contributed to Connetic's venture capital investment strategy. These included diversification, value, and follow-on—each of which comes with a pro and con.

Why Is an Investment Thesis Important?

An investment thesis is a written proposal or research-based analysis of why investors or companies should pursue an investment. In some cases, it may also serve as a historical guide as to whether the investment was a good move or not. Whatever the reason, an investment thesis allows investors to make better, more informed decisions about whether to put their money into a specific investment. This written document provides insight into what the investment is, the goals of the investment, any associated costs, the potential for returns, as well as any possible risks and losses that may result.

Who Should Have an Investment Thesis?

An investment thesis is important for anyone who wants to invest their money. Individual investors can use a thesis to decide whether to purchase stock in a particular company and what strategy they should use, whether it's a buy-and-hold strategy or one where they only have the stock for a short period of time. A company can craft its own investment thesis to help weigh out whether an acquisition or growth strategy is worthwhile.

How Do You Create an Investment Thesis?

It's important to put your investment thesis in writing. Seeing your proposal in print can help you make a better decision. When you're writing your investment thesis, be sure to be clear and concise. Make sure you do your research and include any facts and figures that can help you make your decision. Be sure to include your goals, the potential for upside, and any risks that you may come across. Try to ask and answer some key questions, including whether the investment meets your investment goals and what could go wrong if you go ahead with the deal.

It's always important to have a plan, especially when it comes to investing. After all, you are putting your money at risk. Having an investment thesis can help you make more informed decisions about whether a potential investment is worth your while. Make sure you put your thesis in writing and answer some key questions about your goals, costs, and potential outcomes. Having a concrete proposal in place can spell the difference between earning returns and losing all your money. And that's if your thesis supports the investment in the first place.

Harvard Business School. " Writing a Credible Investment Thesis ."

Lanturn. " What is an Investment Thesis and 3 Tips to Make One ."

Morgan Stanley. " Global Opportunity ."

Medium. " The Data That Built Our Fund's Investment Thesis ."

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Nvidia Stock (NVDA) Is Still a Long-Term Winner, No Matter the Noise

In this article:.

Artificial Intelligence (AI) prodigy Nvidia (NVDA) , the world’s third-highest-valued stock, experienced a material decline in market capitalization following its Q2 earnings in late August. However, NVDA stock has shown some vigor again, rising 5% in the last week. After temporarily surpassing the $3 trillion milestone earlier this year, investors are wondering what the future will hold.  My thesis remains unchanged — I’m bullish on NVDA shares as an investment due to its clear AI supremacy and exponential growth potential.

NVDA’s Long-Term AI-Driven Growth Trajectory Remains Intact

It is well known that NVDA is positioned for a long runway of growth with top-notch clients like Microsoft (MSFT) , Alphabet (GOOGL) , Meta (META) , and Amazon (AMZN) bulking up on their AI efforts. However, beyond these leading customers, Nvidia’s AI penetration is still rising across all industries, increasing my optimism for NVDA stock. Enterprises across industries and geographies are eager to incorporate AI benefits into their operations. Likewise, NVDA continues to enter into collaborations with top businesses.

There’s a reason enterprises are flocking to NVDA for their AI ambitions. Beyond being the leader in AI GPU processors, NVDA provides a complete end-to-end AI infrastructure that supercharges productivity. That’s something that few, if any, of its global AI peers can deliver.

NVDA Remains a One-Stop AI Powerhouse with Margin Growth

Another reason for my optimism about NVDA is CEO Jensen Huang ‘s relentless focus. He is committed to transforming NVDA into a fully AI-driven data center powerhouse that covers all aspects of hardware and software under the NVDA brand.

This strategy is a key reason why NVDA can maintain premium pricing for its products, contributing to steady growth in its profit margins. However, critics argue that NVDA’s exceptional revenue and margin growth may not be sustainable. Some members of the investment community are worried about a slowdown in revenue growth over the coming years.

For context, NVDA reported an extraordinary 217% increase in its data center revenues for fiscal 2024. While that growth is expected to moderate to around 130% in 2025, this remains an impressive triple-digit figure, especially considering the strong FY2024 baseline for comparison. Although lower than today’s pace, these are still remarkable growth projections for the future. I view bullish analyst estimates as a reason to remain confident in this AI leader, particularly as the disruptive potential of generative AI is only beginning to unfold.

Demand for NVDA’s chips is robust and will boost future revenues in the coming quarters. Therefore, despite some investor concerns, I expect NVDA will continue to maintain its clear AI dominance with an unbeatable competitive moat and best-in-class AI products and services.

A Discussion of Nvidia’s Impressive Quarterly Earnings

Nvidia posted yet another stellar Q2 result on August 28, 2024, driven by accelerated computing and the continued momentum of generative AI.  Adjusted earnings of $0.68 per share  handily beat the consensus analyst estimate of $0.65 per share. The figure came in much higher (+152%) than the Fiscal Q2-2023 figure of $0.27 per share.

The company posted a 122% year-over-year revenue growth, delivering $30.04 billion for the three months ending July 31 and surpassing analysts’ projections. Importantly, Data Center revenues, the company’s crown-jewel division, grew 154% year-over-year to $26.3 billion. Additionally NVDA’s adjusted gross margin expanded 5 percentage points to 75.1% from 70.1% a year ago. Many investors were apparently hoping for even bigger numbers, and therefore the stock dropped slightly following the Q2 report. Shares then continued a downtrend until they bottomed out on September 6, just above the $100 level.

Nvidia’s guidance for the 3rd quarter appeared less promising to investors, with revenues expected to reach about $32.5 billion. Guidance came in below expectations. Adjusted gross margins are forecast to level off at about 75%, versus 75.15% delivered in Q2.

NVDA’s Insider Selling Concerns are Over

Insider selling at Nvidia added downward pressure on NVDA shares in recent months. CEO Jensen Huang sold NVDA shares across multiple transactions from June to September, but it’s important to know that those sales were part of a predetermined trading plan adopted in March. This plan allowed Huang to sell up to six million NVDA shares by the end of Q1 2025.

Notably, Huang has completed sales of more than $700 million worth of NVDA stock. Despite the significance of these sales, he remains the largest individual shareholder of the company. At last report, Huang held 786 million shares through various trusts and partnerships, and 75.3 million shares directly, according to company filings. Combined, Huang controls a ~3.5% stake in the company, with an approximate total of 859 million shares.

NVDA Valuation Isn’t Expensive, Given Its Earnings Growth Prowess

Investors may have been hesitant to buy NVDA stock at current levels, pointing to the stock’s extraordinary run as well as due to concerns about the company’s and slowing growth.

On the contrary, however, my contention is that NVDA stock is not as expensive as it may seem. Currently, it’s trading at a forward P/E ratio of about 43x (based on FY2025 earnings expectations). This is actually cheaper than some valuation multiples of its peers. For instance, NVDA’s closest competitor and U.S.-based semiconductor company, Advanced Micro Devices, carries a 46.8x forward P/E. Interestingly, NVDA’s current valuation still reflects a 10% discount to its five-year average forward P/E of 47.3x.

Given NVDA’s consistent outperformance and strong growth potential, the current valuation appears reasonable and justified. Any future dip in the stock price could represent a solid buying opportunity, in my opinion, especially considering Nvidia’s immense potential in the rapidly expanding AI market.

Is NVDA Stock a Buy or Sell, According to Analysts?

With 39 Buys and three Hold ratings from analysts in the last three months, the consensus TipRanks rating is a Strong Buy. The  average Nvidia stock target price of $152.44  implies potential upside of about 26% for the next year.

Conclusion: Consider NVDA Stock for Its Long-Term AI Potential

Despite recent weakness, NVDA shares have nearly tripled over the past year compared to a rise of about 37% for the Nasdaq 100. The post-earnings sell-off for NVDA stock, in my view, was largely driven by profit-taking. After bottoming near $100, the stock appears to be in recovery mode now.

In the near term, I believe ongoing economic and political uncertainties may keep the stock range-bound. However, I view any dips as buying opportunities. I see NVDA as a strong long-term investment given the significant continued potential of AI.

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YETI: Limited Value Creation In An Already Saturated Market

• YETI recently issued a costly voluntary recall for its soft coolers and gear cases, which may impact profitability and sales growth in the short term.
• While YETI has seen success in expanding its international presence, the company may face challenges in standing out in a crowded market and building brand recognition in some regions.
• The current pricing is factoring in the continuation of steady growth from the past and the guaranteed success of international expansion, which I find challenging to achieve.
• Investors may want to reflect on the value that YETI can bring to an already saturated market and its long-term prospects.

YETI ( NYSE: YETI ) has been a fast-growing company in the outdoor product industry, known for its premium products that are designed to last. The company has achieved impressive growth in recent years, utilizing a multi-channel distribution strategy and effective marketing initiatives

This article was written by

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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