Yeti Holdings Inc (NYSE: YETI) has tanked more than 40% over the past five months, which, as per Jim Cramer, makes up for a fantastic opportunity to buy a quality name at a deep discount.
Cramer’s bull case for Yeti Holdings Inc
Cramer’s confidence in the hard-hit stock stems from its gross margin that’s still “substantially” better than before the pandemic. According to the Mad Money host:
This is the right time of the year for Yeti Holdings. The stock tends to experience a seasonal rally in the second and third quarters as people emerge from hibernation and start doing things outdoors; they cook, they grill, and they put a lot of beer in Yeti products.
Yeti is committed to growing its product portfolio. Cramer is also bullish on its push into direct-to-consumer.
Yeti is very attractive in terms of valuation
On the valuation front, Cramer sees Yeti Holdings down 20% for the year as an absolute treat. Explaining his thesis that the stock is significantly undervalued, he said:
Yeti’s ridiculously cheap; trading at 21 times this year’s earnings, less than 18 times next year’s numbers. Historically, it trades at 31 times next year’s earnings. The last time Yeti was this cheap was April of 2020, before it embarked on an epic 18 months rally.
Yeti announced a share repurchase programme worth $100 million in February, which proves that the management also sees the stock as undervalued, he concluded.