The 12 Best Consumer Discretionary Stocks to Buy for 2022
Consumer discretionary stocks may be among 2022's most challenging places to invest in. But these picks could overcome several sector headwinds.
Consumer discretionary stocks had both a great 2021 and a middling 2021. Their 27.2% return across the year is far above what one would normally expect … but that came in a rip-roaring year for the S&P 500, and only ended up being less than a percentage point better than the broader index.
And now, even the best consumer discretionary stocks enter 2022 with quite the handicap: their valuation.
According to Yardeni Research, the consumer discretionary sector will start the year as the most expensive batch of stocks in the S&P 500. This group of retail, automotive, recreation and other stocks trade at a little more than 31 times the coming year's earnings estimates – far frothier than the S&P 500's still-high 21.1.
That's even worse considering some analysts' expectations for markets in the year to come. Morgan Stanley, for instance, sees the S&P 500 declining in 2022, in large part because it expects valuations to contract.
"Tapering is tightening for the markets and it will lead to lower valuations like it always does at this stage of any recovery," Morgan Stanley strategist Michael Wilson wrote in a note to clients.
In other words, success in this sector during 2022 is hardly a given and will require extra scrutiny from stock pickers.
Here, we explore our 12 best consumer discretionary stocks to buy for 2022. This list includes a number of equities that are highly beloved by Wall Street analysts, but also a few contrarian picks that the crowd might be underestimating.
Data is as of Jan. 3. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Analysts' opinions courtesy of S&P Global Market Intelligence. Stocks are listed by analysts' consensus recommendation, from lowest to highest.
iRobot
- Market value: $1.8 billion
- Dividend yield: N/A
- Analysts' opinion: 0 Strong Buy, 0 Buy, 6 Hold, 1 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 3.14 (Hold)
If there is an outlier on this list of consumer discretionary stocks, it is iRobot (IRBT, $68.32). Granted, not one analyst out of the seven covering IRBT tracked by S&P Global Market Intelligence rates it a Buy, but their average target price is $82.75 – 21.1% higher than the stock's current price.
iRobot is generally known for its Roomba robotic vacuum cleaners and Braava robotic mops. However, it recently entered the air purification business by acquiring Aeris Cleantec, a Swiss-based maker of premium air purifiers, for $72 million in cash.
"Today's acquisition of Aeris is an important step in iRobot's strategy to expand our total addressable market and diversify our product portfolio in ways that will provide consumers with new ways to keep their homes cleaner and healthier," said iRobot CEO Colin Angle in the company's Nov. 18 press release. "We are enthusiastic about the growth potential for Aeris' products, especially as the pandemic has raised greater consumer awareness of the value of maintaining a cleaner, healthier home."
The global residential air purifier market is expected to double by 2027 to $6.7 billion. The company expects to use air purifiers as an additional tool for its Genius Home Intelligence platform.
Despite a challenging third quarter due to supply-chain constraints, iRobot still increased sales by 7% to $440.7 million, up from $413.1 million in Q3 2020. And in the nine months ended Oct. 2, 2021, revenue was up 25% on a year-over-year (YoY) basis.
The company also finished the third quarter with no debt, $248 million in cash and $225 million in revolving credit available.
For the entire 2021, analysts expect IRBT to post revenue of $1.6 billion, which would represent a 10.1% year-over-year improvement. And for 2022, revenue is projected to rise another 13.4% to $1.8 billion.
Down 30.5% since early November, IRBT looks like a contrarian value play for 2022.
Williams-Sonoma
- Market value:$12.3 billion
- Dividend yield: 1.7%
- Analysts' opinion: 5 Strong Buy, 2 Buy, 13 Hold, 3 Sell, 1 Strong Sell
- Analysts' consensus recommendation: 2.71 (Hold)
Williams-Sonoma (WSM, $168.87) is another one of the consumer discretionary stocks on this list with a consensus Hold recommendation from the pros. Yet, it has an average target price of $209.32, providing investors with plenty of potential upside (24%) over the next year.
A big concern amongst analysts is that its stock has come a long way over the last year. The shares returned more than 60% in 2021, more than doubling the return for the broad market.
The reason for its strong performance has everything to do with how well consumers have responded to its balanced omnichannel experience.
"In an industry occupied by market players who have not yet made significant investment in their e-commerce capabilities and pure e-commerce players without the service element of our retail business, we believe we are uniquely positioned to benefit from this trend as a digital first, but not digital-only company," stated Williams-Sonoma CEO Laura Alber in the home goods retailer's Q3 2021 conference call in November.
Williams-Sonoma's third-quarter results were a company record. It generated comparable sales growth of 16.9% year-over-year. That's a 41.3% improvement when you compare it to Q3 2019. As a result, it expects sales to grow by at least 22% in fiscal 2021, with an operating margin of 17% at the midpoint of its guidance. And over the long term, annual net revenue is expected to hit the $10 billion mark by 2024.
"As we enter the fourth quarter, we are seeing strong sales and margins continuing," Alber added. "With our strong results to date, our winning positioning in the industry, and our outperforming growth strategies, we are more confident than ever in the long-term strength of our business."
Williams-Sonoma finished the quarter with earnings per share of $9.40 for the nine months ended Oct. 31, double what they were in the same period a year earlier. It also had no long-term debt and $657 million in cash on its balance sheet.
"While significant economic uncertainty remains, we believe that the COVID-19 crisis has caused investors to differentiate between companies like WSM, with business models that are well positioned for the future, and those that face significant challenges," says Argus Research analyst Chris Graja.
And the company's performance during the pandemic "increases our confidence in management's ability to drive sales with innovative products, improve operating efficiency and generate cash," he adds. Graja has a Buy rating on WSM with a $250 price target.
Mohawk Industries
- Market value: $12.5 billion
- Dividend yield: N/A
- Analysts' opinion: 3 Strong Buy, 2 Buy, 8 Hold, 2 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 2.60 (Hold)
At the beginning of November, Raymond James analyst Sam Darkatsh reiterated his Strong Buy rating of Mohawk Industries (MHK, $183.97), one of the world's leading flooring companies. His target price on the stock is $245, implying potential upside of 33.2% over the next 12 months.
"The stock remains our favorite housing-related name in light of its mix of professionally installed products, under-levered balance sheet with heavy share repo, and attractive valuation," Darkatsh wrote in a note to clients.
As a result of its strong results in 2021, the company added $500 million to its existing share repurchase program. That was on top of the $500-million buyback program it approved in October 2020. As of Oct. 2, 2021, Mohawk had repurchased $536 million of the $1 billion total approved by its board.
Darkatsh highlighted that the company doesn't use much leverage in its business as one of the reasons he's bullish on MHK. The company finished the third quarter with $1.7 billion in long-term debt, down from $2.3 billion a year earlier. Its net debt as of Oct. 2 was $1.3 billion, or just 10% of its market cap.
Despite short-term inflation and supply-chain challenges, "Our long-term outlook remains optimistic with new home construction and residential remodeling projected to remain robust, and the commercial sector improving as businesses invest and grow," stated Mohawk Industries CEO Jeffrey Lorberbaum in the company's Q3 press release.
"Next year, our sales should grow with capacity expansions and innovative new product introductions," he added. "Our strategies to optimize our results continue to evolve with the economic and supply chain conditions. Our balance sheet is the strongest in our history, and it supports increased investments and strategic acquisitions to maximize our growth."
As long as the demand for new homes and resales remains high, Mohawk Industries should continue to deliver for shareholders. Over the last 12 months, its total return is 30.5%, 400 basis points (a basis point is one-one hundredth of a percentage point) higher than the entire U.S. market.
Garmin
- Market value: $25.7 billion
- Dividend yield: 2.0%
- Analysts' opinion: 2 Strong Buy, 1 Buy, 6 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 2.44 (Buy)
On Dec. 7, Garmin (GRMN, $133.55) began trading on the New York Stock Exchange, transferring its listing from Nasdaq after 21 years as a public company.
Despite having a market cap of $25.7 billion, only nine analysts currently cover GRMN. However, they believe that this is one of the best consumer discretionary stocks for 2022, as evidenced by a consensus Buy recommendation.
If you're unfamiliar, Garmin is a Swiss-based company that was founded in the U.S. by engineers Gary Burrell and Min Kao in 1989. The corporate name combines the first three letters of each man's first name. Garmin's current CEO, Cliff Pemble, was the sixth employee to join the company back when it started.
GRMN provides GPS-enabled hardware and software to the fitness, outdoors, auto, aviation and marine markets. Its fitness and outdoors segments generate 56% of its revenue and 71% of its operating income.
In the third quarter, Garmin's revenues increased 7% year-over-year to $1.19 billion. Four out of its five categories experienced YOY revenue growth, with sales in its outdoors segment slipping 3% from the year prior amid tight supplies. At the same time, its operating income fell by 11% during the quarter to $283 million due in part to higher freight costs.
However, Garmin has a very healthy balance sheet. It finished the third quarter with $2.0 billion in cash, $1.04 billion in trailing 12-month free cash flow and no long-term debt. Moreover, its free cash flow, or the money remaining after a company has paid its expenses, interest on debt, taxes and long-term investments needed to grow, is a high 21% of its trailing 12-month revenue.
Plus, GRMN raised its guidance for revenue and earnings per share for the entire year. On the top line, it now expects to generate $4.95 billion for 2021, up $50 million from its previous guidance. In addition, all five segments will have double-digit increases over 2020. On the bottom line, it expects $5.60 a share, up 10 cents from its previous guidance.
Analysts are expecting steady growth for Garmin in 2022, as well. For the full fiscal year, earnings per share and revenue are projected to rise more than 7% each.
Columbia Sportswear
- Market value: $6.4 billion
- Dividend yield: 1.1%
- Analysts' opinion: 4 Strong Buy, 1 Buy, 6 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 2.18 (Buy)
Columbia Sportswear (COLM, $98.10) is one of those stocks that always seems to be trailing the overall markets. However, the 12 analysts covering COLM that are tracked by S&P Global Market Intelligence see something special in the stock, giving it an average Buy rating with a median target price of $122.26 – considerably higher than where it's currently trading.
The family owned active lifestyle apparel and footwear company has been around since 1938, growing sales organically and through acquisition. One of the goals of the company is to expand its direct-to-consumer business (DTC).
In the first nine months of 2021, Columbia's DTC business grew 32%, excluding currency, to $829.8 million. Its DTC business now accounts for 42% of its $1.97 billion in total revenue, up from 40% a year earlier.
COLM's apparel, accessories and equipment business remains the growth category for its business. In the first nine months of 2021, this segment grew 26% year-over-year, excluding currency, to $1.52 billion. It accounted for 77% of total sales, with footwear making up the rest. The Columbia brand remains its top seller, accounting for 83% of its overall revenue.
For fiscal 2021, Columbia expects sales and earnings of $3.06 billion and $310.5 million, respectively, at the midpoint of its guidance. Sales are expected to grow by at least 21.5% in 2021. In 2022, it sees full-year sales growth in the mid-teens or better.
Columbia headed into 2022 with a sound balance sheet. At the end of September, it had zero debt and $600.6 million in cash. That was up from $314.5 million a year earlier.
"The company remains debt free and has flexibility to return capital to shareholders," says CFRA Research analyst Zachary Warring (Buy). "We remain bullish as we believe the company will outperform moving forward as sales are pushed into the future and lockdowns and restrictions continue to fade, benefiting the brick-and-mortar business."
Dick's Sporting Goods
- Market value: $9.9 billion
- Dividend yield: 1.5%
- Analysts' opinion: 11 Strong Buy, 3 Buy, 11 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 2.12 (Buy)
Dick's Sporting Goods (DKS, $114.55) reported its third-quarter results in late November and they were impressive. The sporting goods retailer's revenue was $2.75 billion, $250 million higher than the consensus estimate, with adjusted earnings of $3.19 per share, $1.22 higher than analyst expectations.
As a result of its strong showing in the third quarter, DKS raised its full-year forecast. It now expects revenue and adjusted earnings per share of $12.47 billion and $14.70, respectively, at the midpoint of guidance for all of 2021. That's up significantly from its previous estimate.
A substantial portion of this growth has been found in Dick's online sales, which have grown 97% over the past two years. They now account for 19% of the company's overall revenue, up from 13% in 2019. Moreover, DKS continues to innovate its way to further growth.
"We have driven strong profitable growth at Dick's," said Edward Stack, executive chairman of DKS, in the company's third-quarter earnings call. "Looking ahead, I couldn't be more excited about the future of Dick's Sporting Goods. We now expect to deliver comp sales of over 20% for 2021, and remain very confident in the long-term prospects of our business.
As far as consumer discretionary stocks go, Argus Research analyst Chris Graja is bullish on this one. In addition to his Buy rating on the stock, he recently raised his price target by $5 to $150, representing expected upside of nearly 31% over the next 12 months.
"We believe that Dick's has the potential to gain additional market share thanks to its focus on exclusive and innovative merchandise that improves athletic performance; its unique store environment comprised of specialty 'shops' within the store; and its comprehensive customer service," Graja wrote in a note to clients.
Gentex
- Market value: $8.4 billion
- Dividend yield: 1.4%
- Analysts' opinion: 5 Strong Buy, 0 Buy, 2 Hold, 2 Sell, 2 Strong Sell
- Analysts' consensus recommendation: 2.11 (Buy)
Although Gentex (GNTX, $35.34) was founded in 1974 as a manufacturer of smoke detectors and fire protection products, it now generates 98% of its revenues manufacturing automotive products such as interior and exterior auto-dimming mirrors it sells to car companies.
Due to global chip shortages and the resulting reduction in light vehicle production – down 23% sequentially in the third quarter in the major markets of North America, Europe and Asia – the company's revenues in Q3 2021 fell 15.8% to $399.6 million from $474.6 million a year earlier.
However, over the nine months ended Sept. 30, the company shipped 32 million auto-dimming mirrors, up 22% from the same period a year earlier. The higher volume resulted in total sales of $1.31 billion for the nine-month period, 13% higher than in 2020.
As a result of the slowdown in vehicle production in the third quarter – and most likely in the fourth quarter as well – GNTX now expects sales for the second half of 2021 to be $770 million at the low end of its guidance, $200 million less than its original outlook. It also expects gross margins to be 250 basis points less than its projection of 35.5% at the midpoint of its guidance.
But Gentex expects a solid rebound in the new year. Specifically, the company estimates fiscal 2022 sales to be at least 15% to 20% higher than its 2021 revenue estimate of $1.72 billion at the midpoint.
Jeffries analyst David Kelley has a Buy rating on GNTX and calls it a top pick among Tier 1 auto suppliers. have a Buy rating and a $43 price target for GNTX stock. Its upside scenario raises that projection to $54.
"We believe production likely bottomed in September while component availability is improving," Kelley says. "Supply chain risks remain (COVID driven shutdowns, labor) although recent sector pullback suggests potential cautious 2022 outlooks are in part derisked."
Lennar
- Market value: $33.9 billion
- Dividend yield: 0.9%
- Analysts' opinion: 7 Strong Buy, 5 Buy, 7 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 2.00 (Buy)
Lennar (LEN, $111.81) is one of America's largest homebuilders. In fiscal 2021, it delivered 52,825 homes to buyers across 22 states, including California, Texas and Florida.
Wedbush Securities analyst Jay McCanless currently has an Outperform rating on the stock, which is the equivalent of a Buy and a $130 target price. The analyst said that during LEN's fiscal fourth-quarter earnings call in December, management sounded cautiously optimistic about supply chains heading into 2022.
Additionally, Lennar's plans to raise its average prices by $12,000 in its fiscal first quarter prompted McCanless to boost his full-year earnings per share outlook to $15.64 from $14.94.
Lennar is also expected to break ground on a neighborhood built entirely of 3D-printed homes in 2022. The homebuilder first announced the plans in late 2021 as part of a partnership with Texas-based Icon Technology, a pioneer of large-scale 3D printing. Ultimately, the duo will build 100 3D-printed homes with acclaimed architecture firm Bjarke Ingels Group co-designing the neighborhood.
LENx – Lennar's venture arm – was an initial investor in Icon's recent $207 million financing round. LENx is investing in construction technology to help Lennar and the industry build more and better houses.
"Labor and material shortages are two of the biggest factors pushing the dream of home ownership out of reach for many American families," said Eric Feder, president of LENx.
"Lennar has always expanded the boundaries of technological innovation to keep quality homes affordable and 3D printing is an immensely encouraging approach. We are excited to collaborate with ICON to develop solutions to emerging challenges in the coming years," Feder adds.
Sonos
- Market value: $3.8 billion
- Dividend yield: N/A
- Analysts' opinion: 3 Strong Buy, 1 Buy, 3 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 2.00 (Buy)
Sonos (SONO, $30.06) is fresh off an excellent year in the markets, generating a 27.4% return in 2021. This strong price action is hardly new for SONO whose stock price has nearly doubled since its initial public offering in 2018.
A big reason for shares moving higher over the past 21 months is the overall improvement of its business – and with growth expected to continue in the new year, SONO is positioned to be one of the best consumer discretionary stocks in 2022, as well.
In mid-November, the maker of wireless audio products reported fiscal fourth-quarter and full-year results. In fiscal 2021, revenue rose 29% to a record $1.72 billion. If you exclude 2020's extra week, sales increased 32%. On the bottom line, SONO's net income was $158.6 million in 2021, up from a loss of $20.1 million in 2020.
Highlights of the past fiscal year include a 15% increase in total households possessing a Sonos product to 12.6 million; a 47% increase in direct-to-consumer revenue to $412.8 million, and a 19% increase in the listening hours by the users of its 12.6 million households.
Plus, in 2021, Sonos became the official sound partner for the Liverpool Football Club and an official sponsor of ESPN College Football. You can't do these kinds of deals if you're not generating the cash necessary to pay for them.
In 2022, the company sees revenue and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) growth of 16% and 17%, respectively. However, Jefferies analyst Brent Thill (Buy) thinks this outlook is conservative.
"We believe SONO likely provided somewhat conservative fiscal 2022 guidance as it weighs the impacts of a challenging supply to its outlook," Thill says. "We note that in 2021, SONO was a beat-and-raise story, with original fiscal 2021 guidance calling for 13% growth at the high end of the range vs 29% actual growth."
Another reason to like SONO stock in the new year: The company has done an excellent job buying back its stock. Since September 2019, it has repurchased $100 million of its shares at an average price of $19.30. It also has a brand new $150 million share repurchase program to buy back more.
Camping World Holdings
- Market value: $1.8 billion
- Dividend yield: 4.9%
- Analysts' opinion: 4 Strong Buy, 3 Buy, 3 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.90 (Buy)
Camping World Holdings (CWH, $40.74) has been on a tremendous run in recent years. CWH finished out 2021 up more than 55%, and it has a three-year annualized total return of 50.6%. That has many investors wondering if the good times can continue for shares.
If current recreational vehicle (RV) statistics are any indication, the answer is yes.
According to the RV Industry Association's October 2021 report, RV manufacturers shipped 57,971 units in October, 22.5% more than they did in October 2020.
"With this latest report, 2021 officially becomes the year the RV industry built more RVs than ever before – and that is with two months left in the year," said Craig Kirby, president and CEO of the RV Industry Association.
October's record month marks 12 consecutive months of increased shipments. And according to the RV Association, 72 million Americans are planning an RV trip in the next year, 18% higher than the 61 million people who said they were planning a trip the year prior.
The good times experienced by manufacturers have trickled down to Camping World, America's largest RV dealership network.
It had $5.54 billion in revenue in the first nine months of 2021, up 28.5% from the same period a year earlier. Plus, its adjusted earnings per share over this same time frame was $5.49, 98.1% higher than last year.
"Our team's strong performance for the quarter has allowed us to reach a company-high trailing 12-month adjusted EBITDA of $902 million," said Camping World CEO Marcus Lemonis in the company's Q3 press release. As a result, the company raised its 2021 adjusted EBITDA guidance from a range of "$840 million to $860 million to a revised adjusted EBITDA [range] of $915 million to $930 million."
Despite Camping World's significant gains in 2021, its free cash flow yield, based on $180.0 million in trailing 12-month free cash flow and a market cap of $1.8 billion, is a high 9.5%. Anything above 8.0% is considered value territory.
Given the momentum we've seen in CWH, it's likely that this is one of the best consumer discretionary stocks to watch in 2022.
Target
- Market value: $111.1 billion
- Dividend yield: 1.6%
- Analysts' opinion: 16 Strong Buy, 7 Buy, 7 Hold, 1 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.77 (Buy)
Target's (TGT, $231.95) resurgence since CEO Brian Cornell took over the top spot in July 2014 is exceptional. In that time, Target's share price has increased by roughly than 300%, more than double the return of the S&P 500.
Cornell has been so successful as CEO at Target that the National Retail Foundation (NRF) is honoring him when it gives out its 2022 Visionary Award.
"Brian Cornell's purpose-driven leadership and strategic vision reflect an unwavering commitment to his team, and a keen ability to cut through the noise and truly understand what American families want and need," said Matthew Shay, NRF President and CEO.
This leadership isn't just seen in Target's share price. In its third quarter, Target reported 12.7% year-over-year growth in its comparable sales. That's on top of a 20.7% increase in Q3 2020.
In addition, its same-day services continue to grow. In TGT's latest quarter, they grew by 60%. That's in addition to a more than 200% surge a year ago. Target finished the third quarter with 1,924 stores, up from 1,897 a year earlier.
In terms of profits, Target's adjusted earnings per share for the first nine months of fiscal 2021 was $10.37, 83.9% higher than in the same period a year earlier.
A reasonably new initiative is Target opening Walt Disney (DIS) and Ulta Beauty (ULTA) shop-in shops across the country.
"[O]ur guests are telling us it's clearly hitting the bullseye, with makeup, skincare, bath and body, hair care, and fragrance for more than 50 top brands now available at Ulta Beauty at Target, both in-stores and online," said Christina Hennington, Target's chief growth officer, in the company's third-quarter earnings call.
"The company’s results both prior to and during the pandemic suggest that Target is one of the winners in a very competitive retail sector.," says Argus Research analyst Chris Graja. He recently raised his price target for Target to $300 from $295, while maintaining a Buy recommendation.
"We recently raised our estimate of average sales growth at Target to 4% annually from 2% annually over the next five years," he adds. "The performance may be a little bumpy as the company laps last year's super-strong results, but Target's strength at a time when many retailers are struggling could lead to additional market share gains."
For fiscal 2022, Graja sees earnings of $13.07 per share, which he believes will rise to $13.25 in fiscal 2023.
BRP
- Market value: $7.1 billion
- Dividend yield: 0.5%
- Analysts' opinion: 8 Strong Buy, 7 Buy, 1 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus recommendation: 1.56 (Buy)
BRP (DOOO, $87.29) took years to become a household name in the recreational vehicle industry. Founded in 1942 by Joseph-Armand Bombardier, the Ski-Doo brand came to be in 1959. The rest, as they say, is business history.
Today, BRP has eight brands: Ski-Doo, Sea-Doo, Lynx, Can-Am On-Road and Off-Road, Rotax, Manitou, Alumacraft and Quintrex.
Like most companies in 2021, BRP fought hard to keep its supply chain moving. Due to constraints, though, the company saw third-quarter sales fall by 5% year-over-year to 1.59 billion CAD ($1.25 billion). Naturally, its normalized profits fell by 31% in the quarter, to 1.48 CAD ($1.16) per share from 2.13 CAD ($1.67).
Not to worry.
BRP continues to gain market share in the powersports industry in North America, Europe and Asia. Despite its supply-chain issues, it's on track to grow revenues and normalized earnings per share by 27.5% and 74%, respectively, at the midpoint of its guidance. If BRP meets its outlook for 2022, it will deliver a record year.
As you can see by the analysts' opinions – 15 of 16 call BRP a Strong Buy or Buy – the professionals see this as one of the best consumer discretionary stocks going forward.
Baird analyst Craig Kennison has an Outperform rating on the stock. He notes that BRP generates 47% of its revenue from year-round products. Geographically, it generates 55% of its sales in the U.S., another 15% from Canada, and 30% outside of North America. He believes the company's sales outside the U.S. and Canada will likely continue to grow.
"We believe demand is stronger than it appears, but a profound inventory shortage has limited consumer deliveries," Kennison writes in a note. "There are signs that supply-chain pain may have peaked – and a new pre-order process should help dealers capture demand while BRP catches up."
Another reason to like BRP: The company uses excess cash to buy back up to 10% of its public float. Plus, it's cheap, currently trading at 10x forward earnings.
