WEBR - Citi sees attractive entry points in household retail amid pullback

In a note initiating new coverage on a number of household retail names, Citi cited Yeti ( NYSE: YETI ), Solo Brands ( NYSE: DTC ), and Herbalife ( NYSE: HLF ) as stocks offering attractive entry points.

The analysis noted that outdoor and hard goods sectors are “generally more discretionary” than many of the household goods categories that also have a proclivity to be countercyclical. While cautious on the potential for deterioration in consumer health, the bank advised key opportunities in the less-discretionary end of retail still exist.

“Against this backdrop, we like companies that have a strong track record of growth and those stocks with valuations that have come down too far and too fast,” the research stated. “We believe the companies that check those boxes and by our order of preference are: Yeti ( YETI ), Solo Brands ( DTC ), and Herbalife ( HLF ).”

Each stock has marked significant declines in 2022,  underperforming the major indices by a sizable margin.

By contrast, the bank assumed coverage of Tupperware ( TUP ), Weber ( WEBR ), and Nu Skin Enterprises ( NUS ) with more cautious assessments. For the latter, exposure to China is seen as a key issue, while questions over executive and business transitions reduce clarity on the path forward for the former two stocks.

Read more on risks confronting leisure–focused stocks in 2022 .

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