Decrease in Value of Growth Company by 73%, Potential Purchase Opportunity Presently
Decrease in Value of Growth Company by 73%, Potential Purchase Opportunity Presently
In general, aiming to purchase a stock at the absolute lowest point or sell it at the highest often does more harm than good. Pinpointing the perfect time for trades is hard, if not impossible, due to the dynamic and emotionally charged market environment. However, you shouldn't overlook potential opportunities that present themselves. If a promising company's shares have significantly dropped, seize the moment, even if it's unclear if the stock's lowest point has been reached. Ultimately, you won't care or remember the exact price you paid five years later.
The 73% drop in Celsius Holdings' shares from their May high offers a promising chance to invest in a long-term position. Here's why this up-and-coming company is worth considering:
Celsius Holdings: A changing player in the market
If you're unfamiliar with it, that's alright. Many people aren't. Though this energy drink brand is making waves, it still competes in a market predominantly dominated by brands like Monster Beverage and Red Bull.
Yet, Celsius is surging with potential growth. The secret to this growth lies in how Celsius' energy drinks differ from competitors. Like energy drinks from Red Bull and Monster, Celsius' drinks contain ingredients such as green tea, caffeine, guarana seed, and various vitamins. However, unlike its counterparts, Celsius' drinks are free of aspartame, high-fructose corn syrup, and artificial preservatives and flavors.
This seemingly insignificant difference is, in fact, crucial to their target market. Brands like Monster and Red Bull are typically popular among college students, gamers, and extreme sports enthusiasts. Conversely, Celsius energy drinks are designed for fitness enthusiasts. Numerous university studies suggest that its beverages speed up metabolism, helping people burn more fat.
Celsius Holdings has effectively marketed these differences since John Fieldly took over as CEO in 2018 and refocused the company's product positioning and marketing strategies. Since then, annual sales have skyrocketed from less than $500 million to around $1.5 billion.
Though there's still significant growth potential, the stock's recent dip creates a compelling opportunity.
Opportunities on the horizon
Many investors might question the wisdom of investing in Celsius stocks given the recent sell-off. After all, if it's such a strong prospect, why has the stock fallen to a multi-month low?
The answer lies in Celsius' remarkable surge between 2020 and 2023, which became unsustainably hot during the first half of this year. Once the market recognized the stock's overvaluation and moved into profit-taking territory, it panicked.
Additional fuel to the bearish flames came from PepsiCo's decision to alter its product inventory, which resulted in a significant, though misleading, drop in Q3's revenue. Though the top-line stumble is only temporary, analysts still expect a revenue growth of nearly 17% next year, accompanied by substantial profit growth.
The ultimate reason to invest in Celsius Holdings while its shares are low is that the company is resonating with an increasingly health-conscious and global market.
While the global energy drinks market is projected to grow at an annualized rate of 8.5% through 2032, this growth is being driven by a growing interest in healthier, more natural options. Both trends favor Celsius' position in the market.
The cherry on top is that Celsius has entered six new international markets this year, including Australia, France, Ireland, and the United Kingdom. Given its success in the US, it's reasonable to expect similar results in these new markets with a bit more time to establish itself.
The Reward Justifies the Risk
There are risks, of course. Chief among them is its relatively small size and domestic market share. Unfortunately, Celsius doesn't have the same clout and financial resources as larger competitors.
However, considering the company's impressive track record, the evolving energy drink market, and the stock's recent plunge, the risks seem justifiable for growth investors who can endure volatility.
In fact, the investment community agrees. Despite the stock's recent weakness, analysts still maintain a strong buy recommendation. Their current consensus price target of $42.93 represents a 58% premium over the current stock price of approximately $27 per share. At a minimum, it's worth considering the overwhelmingly positive sentiment among analysts, even if mainstream investors have yet to catch on.
Given the 73% drop in Celsius Holdings' shares, this presents a promising opportunity for investing in a long-term position due to the company's potential growth. Celsius stands out in the market with its health-conscious energy drinks, free of aspartame, high-fructose corn syrup, and artificial preservatives and flavors, which appeal to fitness enthusiasts. Despite the recent sell-off, analysts maintain a strong buy recommendation and have a consensus price target of $42.93, representing a 58% premium over the current stock price.