Stock (Symbol) |
Monster Beverage (MNST) |
Stock Price |
$145 |
Sector |
| Food & Necessities |
Data is as of |
| October 16, 2016 |
Expected to Report |
| Nov 3 – 7 |
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) is in the midst of a huge International expansion. 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 is now using Coca-Cola bottlers to quickly expand into other countries. It just transitioned to the new bottlers in South Africa and is now headed to North Africa to gain entry in more than 8 other countries. Other opportunities lie in Turkey, the Middle East, Australia, New Zealand and Singapore. This deal with Coca-Cola also gave MNST a ton of cash to use for acquisitions and stock buybacks. Management had issued a $2 billion share buyback program, and just bumped it up by another $250 million. It also acquired its principal flavor supplier American Fruits and Flavors — or AFF — getting ownership and intellectual property. The company is developing specialized drinks for certain lifestyles, like NASCAR or Burning man crowds, and those give NST more shelf space in coolers. Profits are expected to climb 33% on average the next 4 qtrs, which is one of the best growth rates of any stock I follow. I have traveled to Asia within the past two years and Monster drinks were rarely in the coolers. The International expansion story is real and gives this stock solid growth opportunity for the foreseeable future. |
One Year Chart |
 Sales three qtrs ago were affected by the change in bottlers, and there are still other costs affecting profits, including the merger with AFF, distributor termination costs, and foreign exchange. Thus MNST missed estimates last qtr, but profits still rose 30%. Sales increased 19% and came in well above estimates. Profit Estimates for the next 4 qtrs are 30%, 44%, 30% and 28%. I feel the Est. LTG is too low and believe the company will grow faster than 25% per year. |
Fair Value |
 This stock is selling around my Fair Value right now, and has 21% upside to 2017’s Fair Value. Analysts think the company will grow profits 21% next year and I think profits could climb 30% or more. |
Bottom Line |
 Monster Beverage is utilizing the Coca-Cola network to expand its presence overseas into countries it’s never sold in before. The company is in negotiations to enter China which is the biggest energy drink market in the world. This stock isn’t selling at a discount, as the P/E is 37, but its on a dip now and had a P/E of 41 last qtr. I think there’s solid growth opportunity with this stock for the next 2-to-3 years. MNST ranks 11th in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
11 of 37Aggressive Growth Portfolio 11 of 17Conservative Stock Portfolio N/A |
