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Monster Beverage Up More Than 15%: Will the Rally Continue?

Zacks Equity Research

Shares of Monster Beverage Corporation MNST have increased 15.5% in the past three months, courtesy of continued strength in its energy drinks category and robust strategic endeavors. Its constant efforts toward international expansion and product innovation are commendable. Additionally, the company is smoothly progressing with the transitioning of its Monster Energy brand to Coca-Cola KO bottlers across various markets.

We note that this Zacks Rank #3 (Hold) stock has outperformed the industry’s 3.1% increase in the past three months. Its expected long-term earnings growth rate of 14.3% and a Momentum Score of A further demonstrate the stock’s solid run on bourses.

Let’s discuss.

Factors Driving Performance

Monster Beverage offers a wide range of energy drinks brands like Monster Energy, Java Monster, Cafe Monster, Espresso Monster and more. Robust momentum in the company’s energy drinks category, including strength in its high-performance energy drink — Reign Total Body Fuel — has been driving Monster Beverage’s top-line performance. Moving ahead, management is optimistic about strength in the energy drinks category with the Monster Energy brand growing significantly.

Meanwhile, the company has a solid international presence and is on track to enhance its global footprint to expand market share. Notably, Monster Beverage is expanding international operations in various markets including China, India, EMEA, Africa and the Middle Eastern countries. In addition, smooth progress on Monster Beverage’s deal with Coca-Cola (also referred to as the ‘TCCC Transaction’) has strengthened the former’s position in the global energy drinks market.

Under the aforesaid deal, Coca-Cola along with its bottling partners is Monster Beverage's preferred distribution partner globally, ensuring greater reach for the company’s products. Notably, the strategic alignment with Coca-Cola system bottlers is almost complete in the United States. The company is on track with further launches and transitions, which will further enhance the supply of Monster Beverage’s energy drinks.

Product innovation plays a significant role in the company’s success. Consistent demand for tasty and healthy beverages propels Monster Beverage to regularly innovate products and their flavors. Apparently, the company has been expanding its recently-launched products, including Predator — its affordable energy brand — in the newer markets. Moreover, product launches across the Monster family is likely to continue driving overall sales and profits.

Clearly, all these efforts make us optimistic about Monster Beverage’s upbeat performance going forward.

2 Beverage Stocks You May Count on

Constellation Brands, Inc STZ has an expected long-term earnings growth rate of 8.2% and carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 
Barfresh Food Group, Inc BRFH delivered a positive earnings surprise of 100% in the last reported quarter. It currently carries a Zacks Rank #2.

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