Stock (Symbol) |
Monster Beverage (MNST) |
Stock Price |
$128 |
Sector |
| Food & Necessities |
Data is as of |
| April 18, 2016 |
Expected to Report |
| N/A |
Company Description |
 Monster Beverage Corporation is a holding company. The Company develop, market, sell and distribute alternative beverage category beverages under the brand names of Monster Energy, Monster Rehab, Monster Energy Extra Strength Nitrous Technology, Java Monster, X-Presso Monster, Muscle Monster, Punch Monster, Hansen’s, Hansen’s Natural Cane Soda, Junior Juice, Blue Sky, Hubert’s, Worx Energy and Peace Tea. The company has two segments, Direct Store Delivery (DSD), whose principal products comprise energy drinks, and Warehouse (Warehouse), whose principal products comprise juice-based and soda beverages. The DSD segment develops, markets and sells products primarily through an exclusive distributor network, whereas the Warehouse segment develops, markets and sells products primarily direct to retailers. |
Sharek’s Take |
 Monster Beverage (MNST) has catalysts that are expected to push profits up 28% this year. In June 2015 Coca-Cola bought a 17% stake in Monster, got all Monster’s non-energy drinks, with the arrangement that Coke would handle all Monster’s International distributing. MNST also got all Coke’s energy drinks. Monster had gotten only 1/4 of its sales abroad, and should now be able to double that. I was recently in Hong Kong and Taiwan and was surprised there was no Monster brands in the coolers. This deal also gave MNST a ton of cash. Management’s buying back shares and still has money to spare. It just acquired its principal flavor supplier American Fruits and Flavors, getting ownership and intellectual property. Stock buyback program, could be big. Monster is working with Coke’s Hellenic Bottling Company, and has expanded into 14 of 28 new countries so far, with Russia and China set for 2016. China is the #1 energy drink market in the world. The company is also developing specialized drinks for certain lifestyles, like NASCAR or Burning man crowds, and that’s an additional catalyst. I’ve tracked MNST for a year now but the stock was always too high. But in the last 2 qtrs the P/E has dropped from 48 to 33, thus I will add the stock to the Growth Portfolio and Aggressive Growth Portfolio. |
One Year Chart |
 During the last two qtrs the P/E has fallen from 48 to 37 and now 33. Notice the stock is hitting support here around $130 or so. I think eventually MNST could break out and run higher. Last qtr, net income rose 11%, but eps were –6% due mainly to additional shares on the market from the Coke deal. Sales were hurt by a pre-announced price increase that had customers load-up on product 2qtrs ago. And by distributors who were pissed they were being phased out. Management lowered NxQtr’s est from 31% to 19% due to the change in Intl distributors (ok, fine). F/X also reduced sales 3% for 2015, but that issue has been going away more recently. Profits are expected to climb 19%, 29%, 25% and 46% the next 4 qtrs. The stock has a solid Est LTG of 21%. |
Fair Value |
 My Fair Value on this stock remains at 33x earnings, which is $127 a share. It’s not “on sale” but the best growth stories rarely are. This stock has been expensive for years, and many investors have missed out on some good gains. Monster has great growth opportunity, and I feel the company will surpass these profit estimates. |
Bottom Line |
 Monster Beverage has tremendous opportunity overseas in addition to new brands. It also has a catalyst in concentrate sales, which were 10% of sales last qtr, compared to 0% last year. I feel the company will eventually develop a line of healthy energy drinks. With profit estimates set to accelerate and the stock on a dip this is the perfect time for me to invest. MNST will rank 13th in the Growth Portfolio Power Rankings and 16th in the Aggressive Growth Power Rankings. The stock isn’t timely now, but has good upside. |
Power Rankings |
Growth Stock Portfolio
12 of 34Aggressive Growth Portfolio 15 of 16Conservative Stock Portfolio N/A |
