CELH - Monster Beverage: Bullish On EPS Upside Despite Headwinds

2024-06-20 08:48:00 ET

Summary

• Monster Beverage is well positioned in the non-cyclic market of energy drinks, which is outperforming other non-alcoholic beverages.
• The company has room for future growth, as it is underrepresented in many global markets.
• The strong balance sheet and cash reserves give the company flexibility and protect against economic downturns.
• The Modified Dutch Auction Tender Offer enabling the company to repurchase up to 7% of shares till June 5th, 2024 represents a great step towards higher EPS and beneficial valuation.

Investment Thesis

Amid concerns that the American consumer is reducing their spending, Monster Beverage (MNST) is well positioned within the non-cyclic market of beverages. The price per can is highly affordable for the generic consumer and purchasing some cans is unlikely to jeopardize the individual's monthly budget compared to discretionary items like electronic devices, cars or apparel. Further growth of sales, especially internationally, and a gradually improved margin despite Celsius Holdings' (CELH) rise in market share will drive net income of Monster Beverage, in my view....

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