If you want a growth stock that delivers energy, it's Celsius (CELH), which competes with Red Bull and Monster Beverage (MNST) in the energy/performance drink market, asserts John Gardner, money manager and editor of Blackhawk Wealth Advisors' Market Insights.
CELH is on an impressive growth streak, fueled by both a rise in health trends and a new distribution deal with PepsiCo (PEP). Celsius makes caffeinated, sparkling beverages and pre- and post-workout supplements in a variety of flavors. Celsius claims its drinks and powder supplements boost metabolism while burning fat and calories.
Celsius could disrupt the longtime energy drink duopoly as it continues to gain market share and favor on Wall Street. Monster and Red Bull still dominate the energy drinks market. They claim 39% and 37% of the U.S. market in 2021, respectively, according to research data.
Celsius now has a 4.9% market share. This is expected to double by 2025. Mutual fund ownership of CELH stock has more than doubled in the last two years. No wonder the Street likes it; CELH has been a stellar growth stock since its 2017 IPO. The stock has soared from just over $4 to an early December all-time high of nearly $120.
That great growth is in part a function of exceptional revenue acceleration. The company’s sales catapulted to $133.4 million in the first quarter of 2022 from $6 million during the same period in 2017. For its most recent third quarter, Celsius reported $188.2 million in sales, up 98% year-over-year.
Positive growth trends are likely to continue for both Celsius and the energy drink market in general. The global energy drink market is forecasted to reach $85 billion by 2025 with a compound annual growth rate of 7%, according to industry expert analysis. That's well above this year's global market value of $69 billion.
For Celsius, the main driver to capture more market share will be its distribution agreement with PepsiCo. Pepsi invested $550 million for an 8.5% stake in Celsius in August, making it the long-term distributor of Celsius products.
The deal helps Celsius gain scale, accelerate its market share momentum, and augment its international strategy. It's already paying off for Celsius. As of 3Q22, its U.S. store count exceeded 174,000 locations nationally, up 54% from 2021. Pepsi's pipeline opens opportunities in 126 international markets long-term.
Strong revenue growth for Celsius goes beyond retail stores. Celsius is now the second-largest online seller within Amazon's energy drink category with an 18.5% share, greater than Red Bull's 12% share.
Monster still leads with a 26.2% share. Celsius' Amazon sales hit $42.9 million through the third quarter, doubling those revenues from this time last year. That represents about 9% of the $475.6 million in its total sales for the first nine months of 2022.
Any investor would be ecstatic if Celsius' investment return was anywhere near Monster Beverage's over the past 20 years. Monster Beverage’s stock has soared a whopping 115,065% over last 20 years. Energize your growth stock portfolio with CELH.
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