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4 Great Mid-Cap Growth Stocks With Beloved Brands

By Josh Kohn-Lindquist – Updated Oct 31, 2021 at 5:33AM

Key Points

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These four young companies have avid customer bases, but are they great investments?

Some of my favorite investments have been products and services that I genuinely love using in my day-to-day life. Along that same line, many of the stocks I currently own or keep on my radar are brands that I can't seem to get away from for long.

Whether I'm on Twitter, listening to podcasts, buying gas, or simply talking with friends and family, certain brands seem to keep reappearing constantly. While many juggernaut brands accomplish this simply through massive advertising budgets, many smaller players gain notoriety through their loyal customer base and simple word of mouth.

For fitting this billing to perfection, let's look at four companies posting compelling growth rates led by unique products that their customers love.

Two people write down information in a notebook while checking a laptop.

Image source: Getty Images.

Yeti Holdings: Quarterly sales up 45% year-over-year (YOY) 

Through its drinkware and coolers sales, Yeti Holdings (YETI -3.50%) is quickly becoming a household name in the United States. In fact, over the last three years, Yeti's unaided brand awareness has risen from 10% to 17% in its home country.

Driven by this increasing brand recognition, Yeti's direct-to-consumer (DTC) sales have continued seeing massive growth, up 52% over the last 12 months as of its second quarter. These DTC sales are precious to the company, as they not only provide higher margins but also allow it to collect important customer data.

Since 2015, DTC has grown from 8% to 54% of total sales, highlighting the burgeoning brand's mindshare among consumers. Armed with this growing treasure trove of customer data, Yeti has its sights set on international sales.

Yeti's international sales increased 237% during Q2, growing from a small base, becoming 9% of total sales. With a company price tag, or market capitalization, of $8 billion and a largely untapped international sales base, Yeti's stock still offers intriguing upside to investors.

FIGS: Quarterly sales up 58% YOY 

By offering personalized and comfortable scrubs, FIGS (FIGS 2.38%) intends to revolutionize a forgotten-about portion of the apparel market. Driven by effective word-of-mouth advertising, the company's DTC sales strategy is paying immediate dividends, as it already maintains a gross profit margin of 73% as of its second quarter.

Founder-led and 1.6 million members strong, FIGS aims for $1 billion in annual sales by 2025, which is quite a step up from its Q2 sales total of $100 million. With the global healthcare apparel market being worth $79 billion, the company would still have a massive growth runway remaining, even once it reaches $1 billion in annual sales. 

Recording a Net Promoter Score (NPS) of +81, FIGS has one of the highest ratings in the consumer goods industry. NPS is scored on a scale between -100 to +100 and compares the promoters of a company versus its detractors. Thus, FIGS essentially has nine promoters of its products for every detractor, with its score of +81.

Best of all, this loyalty shows up on the income statement, as 62% of sales during 2020 came from existing members. With a market capitalization of $6 billion, FIGS stock could generously reward investors as it continues to grow into its $79 billion addressable market.

Crocs: Quarterly sales up 73% YOY 

Despite its stock rising nearly 2,000% over the last five years, Crocs (CROX 1.54%) still seems to be a battleground stock for the investing community. Since it ranges from simply being an ugly shoe-maker to a revolutionary environmental, social, and governance-focused innovation machine, opinions on Crocs are plentiful. 

However, it is hard to argue with the immense success it is seeing from focusing on digital sales. Since 2019, Crocs has grown its digital sales from $300 million to $700 million over the trailing 12 months. Currently accounting for 37% of overall sales, the company's digital focus fits beautifully within its broader ecosystem of brand awareness through social media. 

With management aiming for digital to grow to 50% of sales by 2026, Crocs plans to lean on its brand's presence as it continues its global growth story. Sporting an NPS +47, Crocs was ranked 51st on Comparably's Global Top 100 Brands, showing that its international growth potential is more than just a fad. 

Celsius Holdings: Quarterly sales up 117% YOY 

Bursting onto the beverage scene, Celsius Holdings (CELH -1.33%) and its proprietary MetaPlus formula offer health-conscious customers an intriguing proposition when looking for an energy boost. Celsius is a unique entrant into the beverage world, containing no sugars, artificial flavorings, aspartame, or preservatives. This uniqueness is especially true once you consider its clinically proven benefits.

These benefits include higher calories burnt, increased fat reduction, and an overall metabolic increase, making it a popular pre-workout drink. Touting these kinds of benefits, Celsius is quickly becoming a threat to its many beverage peers, many of which are generally unhealthy.

Highlighting its wide-scale acceptance by consumers, it has seen revenue grow from $17 million in 2015 to $188 million over the trailing 12 months. Despite this 50% annualized growth rate, Celsius has only carved out a 1.7% niche in the global energy drink market, showing just how vast the remaining opportunity could be. 

However, perhaps most impressive is that sales have been accelerating recently, shown by its 117% increase in quarterly sales year over year. In fact, according to Nielsen data from July 2021, Celsius was close to 200% sales growth for the prior 12 weeks.

When it reports earnings in early November, it will be interesting to see what growth rates Celsius delivers as it continues to ride the mega-trend of healthier lifestyle choices for consumers. Currently trading with a $7 billion market capitalization, Celsius could quickly expand beyond its mid-cap status.

Josh Kohn-Lindquist owns shares of FIGS, Inc. and Yeti Holdings INC. The Motley Fool owns shares of and recommends Celsius Holdings, Inc. The Motley Fool has a disclosure policy.

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