Here's Why Monster Beverage (MNST) is a Hot Investment Pick
Monster Beverage Corporation MNST appears to be a solid bet, given the company’s efforts to remain on growth trajectory. We expect the company to continue benefiting from brand strength, constant product launches and innovations. Further, it is witnessing robust growth in international markets. All these helped the company to deliver robust first-quarter 2019 results.
In the past six months, shares of this Corona, CA-based company have rallied 32.5% outperforming the industry’s growth of around 17%.
Let’s delve deeper into the factors, which have been driving this Zacks Rank #2 (Buy) stock.
Factors Narrating Monster Beverage’s Growth Story
Monster Beverage offers a wide range of energy drink brands such as Monster Energy, Java Monster, Caffe Monster, Espresso Monster, among others. Further, the addition of Coca-Cola’s energy drink brands to the company’s portfolio (included in the Strategic Brands segment) has strengthened its position in the global energy drinks market.
Management remains optimistic about the energy drinks category, which is expected to continue gaining momentum, with the Monster brand growing significantly. Moreover, product launches across the Monster family will drive the company’s overall top and bottom lines. Evidently, net sales at Monster Energy Drinks and Strategic Brands segments grew 11.5% and 6.9%, respectively, in the first quarter of 2019.
In addition, the company has a solid international presence and remains on track to enhance its global footprint to expand market share. The deal with Coca-Cola in 2015 (also referred to as the “TCCC Transaction”) provides Monster Beverage with full access to Coca-Cola’s world-class global distribution network. This deal has significantly aided the company’s international presence.
Notably, Monster Beverage has been expanding international operations into various markets including China, India, Africa and the Middle East countries. These developing and emerging markets have a high growth potential due to their relatively low per capita consumption. Another factor is the burgeoning middle-class population, with rising income levels, which has been driving the demand for convenient, trendy and affordable food and beverages in these countries. In the second quarter of 2019, the company plans to launch Monster Energy brand in Azerbaijan and Saudi Arabia, with further launches in the EMEA planned for later this year.
Apart from these, the company is benefiting from product innovation. There is consistent demand for new products that are tasty as well as healthy. Monster Beverage regularly introduces new flavors of existing products, while removing non-performing products. In the first quarter, it successfully launched Monster Energy Ultra Paradise, Monster Dragon Tea line, Reign Total Body Fuel line of high-performance energy drinks and Java Monster Swiss Chocolate in the United States.
Additionally, the company rolled out many Monster Energy and Strategic Brands energy drinks in existing international geographies. Moreover, it is set to launch the new strategically preferred affordable energy brand — Predator — in additional international markets in 2019.
We expect all the aforementioned factors to consistently boost the company’s performance and help it remain in investors’ good books.
3 More Beverage Stocks to Watch
PepsiCo, Inc. PEP has a long-term earnings growth rate of 7% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Constellation Brands, Inc. STZ has a long-term earnings growth rate of 8.6% and a Zacks Rank #2.
Davide Campari-Milano S.p.A. DVDCY has a long-term earnings growth rate of 7.5% and a Zacks Rank #2.
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