Monster Beverage Corp (NASDAQ:MNST) stock is soaring on Friday after a blowout fourth-quarter earnings report reinvigorated investors.
Before today’s gains — MNST stock was up as much as 11% in early trading — Monster stock had already soared 66% higher in the last year alone, crushing the gains of the benchmark S&P 500 index by 51 percentage points.
After yesterday’s stellar results, and on the heels of an expanded distribution agreement with The Coca-Cola Co (NYSE:KO), MNST is looking like a real contender for the best growth stock to buy for 2015.
A Monster Fourth Quarter
MNST stock earned the full attention of Wall Street after fourth-quarter earnings per share jumped 64% to 72 cents, topping the 59-cent EPS estimate by 22%. Monster Beverage stock also easily beat revenue expectations, as revenue came in at $605.6 million vs. calls for $584.5 million.
So, with MNST stock already up about 30% in 2015 after yesterday’s stellar results, what makes Monster one of the best growth stocks to buy for 2015?
First of all, Monster is developing a healthy habit of beating the pants off earnings expectations, with MNST stock trumping Wall Street consensus estimates by an average of 12% over the last four quarters.
But more than that, MNST simply has the best growth prospects in the beverage industry. This isn’t news — I’ve been touting Monster as a market leader since last May, and the stock has done pretty well since then. MNST stock is up 100% since I first crowned it as the best stock to buy in the beverage industry.
Coca-Cola and PepsiCo, Inc. (NYSE:PEP) are both plagued by major currency headwinds and flatlining revenue growth. Dr Pepper Snapple Group Inc. (NYSE:DPS) is projected to increase sales by 1% to 2% over the next two years. Keurig Green Mountain Inc (NASDAQ:GMCR) is expected to grow revenue at just a 6% clip in 2015, far less than Monster stock’s 15% growth rate.
Coca-Cola Hopping on the Energy Drink Bandwagon
There is no growth in the soda business anymore. According to Beverage Digest, U.S. sales of carbonated soft drinks declined for the ninth straight year in 2013, while energy drinks have continued to grow in popularity.
That’s why KO is hopping on the energy drink bandwagon. In August 2014, KO and MNST struck a deal, with Coca-Cola transferring its energy drinks business to Monster and MNST giving its non-energy-drink business to KO. In the same deal, Coca-Cola also agreed to become Monster’s preferred global distribution partner as KO acquired a 16.7% stake in MNST stock and paid Monster $2.15 billion in cash.
In other words, the world’s premier soda company is giving Monster Beverage full access to its world-class distribution network and surrendering its entire energy drink portfolio (including brands like Full Throttle and Nos), essentially guaranteeing a swift and sudden expansion of Monster’s global market share. Plus Coca-Cola’s 16.7% stake in MNST stock means KO has skin in the game.
All signs point to Monster Beverage, which was named the 15th most innovative company in the world by Forbes in 2014, continuing to assert its dominance this year.
Simply put: It’s onward and upward for MNST stock from here.
As of this writing John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at firstname.lastname@example.org.