MNST

The Monster That Turned $1 Into $20,000: Why This Energy Drink Stock Is a Must-Buy

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The leader in terms of energy drink production, Monster Beverage stock (NASDAQ:MNST) remains the top way to play this space globally. The company’s steady top and bottom line growth have yielded remarkable returns for long-term investors that have stuck with the stock.

Although the beverage market may be getting saturated, Monster Beverage stock has prioritized its product innovation to keep up with their target market. The company’s international expansion is a key growth driver, with over half of the total energy drink market located outside the U.S. Monster has efficiently managed through inflationary challenges, maintaining solid year-over-year performance.

That said, many investors may ask: is Monster Beverage stock worth the risk and the investment in this current climate? Let’s dive in.

MNST Stock Has Rocketed Higher Over the Past Three Decades

For 31 consecutive years, Monster’s stock price has surged alongside its sales. Incredibly, over the past two decades, MNST stock has surged over 200,000%. That’s a 2,000X for those counting. Not many stocks can ever provide these kind of returns, and continue showing strong growth year in and year out.

In 1935, the company started as a family juice business named Hansen’s. It wasn’t until 1990 that the company released its energy drinks, a business that didn’t really thrive until 2002. Through the company’s meticulous and ingenious strategic moves, Monster Beverage was able to dominate the market in a slow but steady. (Really, it was a fast and steady move, something that’s hard to find in today’s market). Overall, most analysts and experts following the stock continue to love the CEOs’ strategies and excellent market predictions. 

Coca-Cola (NYSE:KO) has also noticed how fast Monster Beverage gained traction. The world’s largest beverage company decided to invest in Monster in 2015, for a 16.7% stake in the company. What a bet that was, as that stake is now valued at roughly 20% of the company. This collaboration made Coca-Cola Monster’s preferred global distributor and involved swapping ownership of various brands. 

Monster Beverage stock gained energy drinks like NOS and Full Throttle, while Coca-Cola acquired Hansen’s Natural Sodas and other brands. This partnership contributed significantly to Monster’s global expansion and stock performance.

The Bear Case

Monster Beverage defied expectations in the Nasdaq 100 index, experiencing significant growth despite not being a tech firm. Over the past decade, its shares have surged by over 400%. 

However, Monster faces challenges as the energy drink market saturates and competition intensifies. Consumer spending tailwinds may also wane, affecting its growth trajectory. Competition is tight, especially from up-and-coming rival Celsius Holdings (NASDAQ:CELH).

Celsius poses formidable competition, reminiscent of Monster’s earlier days. Monster’s high price-earnings ratio may not reflect its current growth prospects, but rather the competitive environment the company current faces.

Strategy is Key

Due to its product expansions and brilliant strategic moves, Monster Beverage has seen continued top-line growth which has surpassed its overall industry. Energy drinks were the main driver of the company’s strong performance in 2023, which was the company bring in a 15.1% increase in net sales.

Fueled with its product innovations, Monster Beverage is a promising stock. The company continues to launching various drinks globally, like Monster Aussie Lemonade and Ultra Paradise, driving growth. The company also mitigated rising costs through price adjustments globally. In Q4 2023, they increased prices and planned further hikes. Due to these actions, the gross margin expanded.

All that in consideration, Monster Beverage stock shows promise as an investment with its favorable factors. Over the long-term, this leading energy drink player should continue to dominate this space and grow alongside surging demand.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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The post The Monster That Turned $1 Into $20,000: Why This Energy Drink Stock Is a Must-Buy appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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