There are plenty of great candidates out there if you’re looking for the ultimate growth stock. You might have a checklist of traits you would like to see in your next $1,000 investment. I get the feeling that Celsius Holdings (CELH -1.98%) would check off most of the boxes.
The very definition of growth requires healthy top-line jumps, and the company behind functional sparkling beverages has that in strides. If it hits Wall Street’s fourth-quarter target in a couple of weeks it will be the third year in a row of revenue growth of 99% or better. If you like longer timelines, it will be Celsius’ fourth straight year of better than 74% growth within a seven-year run of increasing its top line by at least 43%.
There’s more to this story than just big numbers. The future is pretty bright, too. Let’s take a closer look at why this beverage industry disruptor is the ultimate growth stock.
Canned laughter all the way to the bank
A quick primer on what makes Celsius unique is in order. It makes fruit-flavored carbonated beverages that don’t just taste pretty great. The beverages have a proprietary blend of ingredients that help trigger thermogenesis, safely and temporarily warming up your body temperature to the point where it boosts your metabolism. It makes it easier to burn fat and calories, especially if consumed ahead of a workout or any kind of cardio activity.
You can argue that a company upending the stodgy world of beverage stocks — roughly doubling its share of the energy drink market in each of the last three years — is going to attract copycats and imitators. I’m not saying you would be wrong, but folks have been making the same argument against PepsiCo‘s Gatorade or Coca-Cola for generations. I’ll get back to PepsiCo in a moment.
Successful growth stocks also crank out beautiful stock charts. Celsius is a 49-bagger over the last five years. It’s a short list of stocks that have performed better, and Celsius still being off most investing radars is a grave disservice to folks tapping the market for life-altering wealth.
Another hallmark of a winning growth stock is its ability to consistently put out “beat and raise” performances. Celsius is routinely trouncing Wall Street expectations, leading analysts to jack up their projections that the beverage speedster will also exceed with ease. Celsius isn’t just profitable now. It has landed ahead of Wall Street profit targets by at least 85% in each of its last three quarterly reports.
Image source: Getty Images.
Sipping the upside
A lot of market darlings have a couple of years of growth before fizzing out, but Celsius is aiming higher. The catalysts are there for future upticks. Here’s where PepsiCo steps back into the story. The pop star invested $550 million for an 8.5% convertible preferred stake in Celsius two summer ago. The move made PepsiCo its new domestic distribution partner. The partnership has opened new doors. It initially got Celsius stocked in hotel chains, airports, and casinos. Lately it’s been a food service push. You can now buy a Celsius at the more than 2,700 Jersey Mike’s sub shops, and it recently began popping up at Dunkin’ stores.
It’s not just about stateside growth. Last month Celsius announced its expansion into Canada, Great Britain, and Ireland. PepsiCo is leading the way in Canada with a different distributor tackling its transatlantic push.
Growth will inevitably slow at some point. Analysts see revenue rising just 39% this year, but Celsius has punked Wall Street pros before. Bottom-line gains could grow even slower as it invests in making itself a global brand, but the long-term benefits far outweigh any short-term sacrifices.
Another potential catalyst is a short squeeze. Short interest was at an all-time high earlier this month, with bearish bets being placed on 16% of Celsius’ outstanding shares. Another blowout performance — like last time when it called for a 3-for-1 stock split — could send the naysayers scrambling for cover.
Celsius is an ultimate growth stock. The cans may be svelte, but its appreciation potential continues to be wide.
