In the brutally competitive beverage business, distribution is king. And through partnerships with PepsiCo, Costco, Target, CVS Health and Amazon, the disruptive Celsius drink has fueled impressive gains. Now as Monster Beverage acquires a Celsius competitor, CELH stock now looks to keep energizing its current buy zone.
Founded in 2004, Celsius popped onto the scene — and the radar of many investors — with the popularity of its proprietary, clinically-proven flavorful formula. The company offers a wide lineup of sparkling and noncarbonated Celsius drinks. It also has powder stick packets which can be mixed with water.
Boosted by 344% earnings growth last quarter to 40 cents a share, CELH stock has popped up on both IBD Leaderboard and the IBD 50. Wall Street expects 88% EPS growth when Celsius reports Q2 numbers on Aug. 10. Analysts forecast 143% earnings growth for the full year.
Top-line growth rose 95% last quarter to $259.9 million. Over the past three years, Celsius has delivered average annual sales growth of 116%.
Last year's distribution deal with PepsiCo, as well as deals with Amazon Prime, Costco and others, has propelled awareness — and sales — of the Celsius drink brand. It has established itself as the healthy, functional alternative to conventional energy drinks.
Celsius Drink: The Growth Monster
Earlier this month, Monster Beverage announced it was acquiring bankrupt beverage maker Bang Energy — a company Monster sued in 2018 — for $362 million. The deal is subject to approval from the bankruptcy court.
With sales of $1.7 billion last quarter, Monster is much larger than Celsius. But the Celsius drink has found its niche and is growing much faster than its energy drink rival.
Celsius has no aspartame, no high-fructose corn syrup and is non-GMO, with no artificial flavors or colors or added sodium. Its products are kosher and vegan certified, soy, gluten, and sugar free. Since 2005, multiple university studies on the Celsius drink and formula have been published in peer-reviewed journals.
CELH Stock Cools Off But Stays Fresh
Since the close of its first month after its May 2017 IPO, Celsius has run up an eye-popping 3,764% through July of this year.
Following a breakout in May, CELH hit the 20%-25% profit zone. As it continued to hold the bulk of those gains, exposure for Celsius was raised in IBD Leaderboard as it rebounded off the 10-week moving average earlier this month. It went on to also flash a three-weeks tight pattern, creating 153.94 potential entry. But a late-afternoon drop on July 7 spoiled the setup.
The stock certainly deserved time to cool off with a Celsius drink this summer after it posted six straight weekly gains, a strong run signaling demand. CELH dropped Monday but found support at its 50-day line. It remains in the buy zone, which ranges from 140.85 to 154.94.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
