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Here's Why Monster Beverage Possesses a Robust Upside Story

Zacks Equity Research
·4 mins read

Monster Beverage Corporation MNST displays a remarkable upside story despite the looming effects of the coronavirus pandemic. Strength in the company’s energy drinks category has been the cornerstone of its success, even amid the pandemic. It has been experiencing continued strength in its energy drinks category, which has been driving its performance. Further, the company’s product innovation strategy plays a significant role in its upside story.

Notably, the Zacks Rank #2 (Buy) company has a market capitalization of $43.9 billion. In the past three months, it has gained 25.1% compared with the industry’s growth of 7.2%. Moreover, it has comfortably outpaced the Consumer Staples and the Zacks S&P 500 composite’s growth of 9.3% and 13.8%, respectively.

Why Monster Beverage Should Retain the Momentum

Monster Beverage is expected to continue its trend of delivering robust growth in the energy drinks business, thanks to its wide range of energy drink brands such as Monster Energy, Java Monster, Cafe Monster, Espresso Monster, Monster Energy Mule, Juice Monster Pipeline Punch, Juice Monster Pacific Punch, Juice Monster Mango Loco, Monster Ultra Paradise and Monster Hydra Sport. Additionally, management remains optimistic about the significant growth potential of its Monster Energy brand. Also, it expects product launches across the Monster family to drive the overall top and bottom lines.

 


 

In second-quarter 2020, the company posted impressive results despite the adverse impacts of the COVID-19 pandemic. Sales improved on a sequential basis in the second half of the quarter, with stores reopening in a phased manner. Solid performance in its online, club store, mass merchandiser and grocery, and related businesses provided some cushion to the top line. Also, management doesn’t foresee any material impact of COVID-19 and noted that it is not facing any supply-chain disruption currently.

Also, Monster Beverage remains committed to product launches and innovation to boost growth. In second-quarter 2020, it introduced Monster Energy brand energy drinks and Reign Total Body Fuel high-performance energy drinks in a few countries.

Some other notable launches include Fury Gold Strike in Honduras and Salvador, Predator Gold Strike in Nigeria, Ultra Paradise in Argentina and Puerto Rico, Monster Mango Loco in Guatemala, El Salvador and Honduras, Monster Energy Mule and Mother Tropical Blast in New Zealand, Juice Monster Pacific Punch in Spain, Juice Monster Pipeline Punch in Romania, Juice Monster Mango Loco in Switzerland, and Monster Ultra Paradise in Austria, the Baltics, Hungary, Denmark, Spain and Poland.

Currently, Juice Monster Pacific Punch and Juice Monster Pipeline Punch are available in 10 and 21 markets across EMEA and are expected to be expanded in additional two and eight markets, respectively, in 2020. Also, Juice Monster Mango Loco and Monster Ultra Paradise are now available in 35 and 14 markets in EMEA and will be available in 10 and seven more markets, respectively, in 2020.

In addition to these, Espresso Monster in Milk and Vanilla flavors are available in 20 markets in EMEA and will be launched in 2 more markets. Monster Hydra Sport, which was introduced in Spain, will be available in another market by 2020. Encouraged by the performance of Reign, the company plans to expand it to six more markets in 2020. Monster Mule, which was launched in Poland, is anticipated to be launched in additional nine markets in 2020.

For the third quarter, the company intends to launch Predator in Ethiopia and additional six EMEA markets — Bosnia, Croatia, Ghana, Romania, Russia and Slovenia — in 2020.

We believe that these solid fundamentals are likely to keep the company’s existing momentum in the days ahead.

Other Stocks to Consider

National Beverage Corp. FIZZ flaunts a Zacks Rank #1 (Strong Buy) at present. It delivered an earnings surprise of 22.9%, on average, in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Boston Beer Company, Inc. SAM delivered an earnings surprise of 26.1%, on average, in the trailing four quarters. The company presently sports a Zacks Rank #1.

Keurig Dr Pepper, Inc. KDP currently has a long-term earnings growth rate of 11.6% and a Zacks Rank #2.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


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Monster Beverage Corporation (MNST) : Free Stock Analysis Report
 
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Zacks Investment Research