Can monsters be good? When it comes to the likes of Wazowski and Sullivan, there’s no question. Those guys are sweet as honey. But, they’re not the only ones – how about Monster Beverage? This ghoul has already become a leader in the stock market, but does it have a chance at becoming a real heavyweight in this global Monstropolis? After outperforming the S&P 500 index by 24% over the last year, its “energy-based” growth doesn’t seem to be going anywhere.
S&P 500 is the index that includes the stocks of the 500 biggest companies listed on the US-based exchange. Because of that, it often represents the general trend in the American market – and you can probably imagine what the current trend is. Clue: bad. Very bad. The S&P 500 index has lost about 15% over the twelve months.
So what’s behind the decline of these world marks? You guessed it – the economy. Now, we all knew that the Covid-19 pandemic would not pass without leaving a mark on the economy. However, if you cast your mind back to the beginning of 2022, most of us thought the worst was behind us. Lockdowns were lifting, masks were getting tossed out, the bulls were charging, and we all started breathing a huge sigh of relief.
Alas, that feeling didn’t last long. In March, the economy got a swift punch in the gut from the significant military confrontation between Russia and Ukraine – and the immediate effect on the market is clear when you look at the chart. The conflict led the whole world into a massive energy crisis, accompanied by an overall increase in the cost of everyday items. This is what erased the boundaries between countries, metaphorically, of course, tying them together in a battle for survival. To keep inflation down, central banks quickly began hiking record-low interest rates, leaving the stock market feeling a little shell-shocked.
But, as we remember, the S&P 500 Index lists 500 companies. That’s a lot of companies, so there are inevitably some that perform strongly even in these circumstances – and one of them is Monster Beverage. It’s one of the world’s biggest beverage companies, with the second-highest market share after Red Bull. You have probably heard about Monster Energy, Burn, Relentless, NOS, Reign, or any of their other popular brands.
Monster Beverage stock has seen growth of 8% over the last 12 months. Maybe that doesn’t sound too impressive, but if we compare these two lines…
Yep, now Monster Beverage is looking much better. The company is a strong brand, manufacturing various products and selling them worldwide, and as a result, its revenue has been steadily growing for the past few years. That’s likely created a few loyal, long-term shareholders. Check out the five-year chart here.
The company is not just a money-maker. It also reinvests money in business development. That allows it to increase sales regularly, often followed by stock growth. It’s like a vicious circle but in a good way. A virtuous circle, perhaps?
In addition, we need to consider the fact that Monster Beverage is still facing the after-effects of covid and is trying to resume supply chain operations. When that happens, it will be just one more growth-promoting factor.
However, Monster Beverage, like all of us, still has to face the big bad inflation under the bed. The company’s costs are rising quickly while its customers are falling into poverty. On the plus side, the company has low-price segment drinks so that the penny pinchers might stick around.
One more factor to smile about (if you have Monster Beverage shares in your portfolio) is analysts’ opinion on the stock’s prospects in the next 12 months – average forecasts see a +9% upside. Of course, you need to do your research before buying the papers, but the potential for 9% growth does sound kinda nice in a situation when the future of American indices is cloudy.
Disclaimer: This article is not intended to be a recommendation. The author is not responsible for any resulting actions of the company during your trading/investing experience.
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