Monster Beverage Corporation (NASDAQ:MNST) is a leading developer and marketer of energy drinks and other natural sodas, juices, smoothies, teas, lemonades and enhanced waters. On Friday, MNST stock rose on signs of renewed growth following first-quarter earnings that beat consensus estimates of 32 cents per share by a penny.
S&P Capital IQ retained its “4-star buy” rating and raised its 12-month target by $3 to $54, and Credit Suisse Equity Research reiterated its “Outperform” rating and a price target of $59. Standard & Poor’s announced a new 2018 EPS estimate of $1.73 vs. 2017’s EPS estimate of $1.50.
Monster’s board authorized a new $500 billion share repurchase program in March, and that should also add to EPS, helped by its long-term strategic partnership with The Coca-Cola Co (NYSE:KO). Sales are estimated to rise 11% in 2017 driven by new products, price increases and volume growth.
Technically speaking, MNST stock completed a triple-bottom in late-February at $41. The bottom is confirmed by a breakaway gap that (temporarily) jumped through the stock’s 50- and 200-day moving averages. The gap was partially filled before twin CBR Buys (my internal indicator) turned north again, this time closing on Friday above the 200-day moving average at $48.87. Volume was very high, and MACD closed in positive territory.
Thus, Monster Beverage appears to be a good trade if it can be bought at $47 with a trading objective of $55 for a proposed return of 17%.
Note: Another reason for traders to consider MNST stock is that beverage stocks are traditionally strong during the summer months.
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