Shares of Monster Beverage (Nasdaq: MNST ) trekked higher yesterday after the company reported better-than-expected earnings results. Record sales and profits garnished the beverage giant's first quarter, which helped the stock gain 13%, pushing it toward $74 a pop on Wednesday before the close. Hitting new quarterly highs is always exciting. But when it comes to Monster Beverage, whose shares are already up more than 99% so far this year, is it too late for investors to grab a piece of the action? Let's take a closer look.
I'll drink to that
Previously known as Hansen Natural, Monster Beverage trounced Wall Street estimates, delivering a solid first quarter. Gross sales for the period surged 26.9%, registering just north of $517 million. The company's bottom line also got a boost with net sales of $454.6 million, which was up from $356 million for the same period a year ago.
The party continued with net income jumping 38.3% to $76.1 million or $0.41 per share, up from just $55 million in the earlier year -- analysts were expecting $0.38 a share for the quarter ended March 31, 2012. Monster's margins were equally as impressive, with operating margin widening from 24.8% to 27.8% -- the highest operating margin in the industry.
Monster has had such tremendous success in the domestic energy drink space that the company is taking its products overseas. Only 20% of Monster's sales last year came from outside the U.S., which means there is plenty of room for international expansion. A healthy balance sheet with zero debt and plenty of cash should help the company speed growth in emerging markets.
As Monster energy products fly off the shelves, alternative options like AMP Energy from PepsiCo (NYSE: PEP ) and Coca-Cola's (NYSE: KO ) Full Throttle drinks are struggling to catch on; in fact, U.S. sales of sodas from both Coke and Pepsi have dipped to their lowest points since 1996. But that hasn't stopped other beverage giants from trying their hand in this caffeinated niche segment.
With the $8 billion energy drink market set to reach $52 billion by 2016, Starbucks (Nasdaq: SBUX ) didn't waste any time. The coffee retailer recently released its own line of energized concoctions, which it calls Starbucks Refreshers. For those seeking a wholesome jolt, the new drinks are made from natural juice and green coffee extract.
Despite tough competition from larger rivals with massive marketing budgets, Monster continues to win the consumer taste test. While the stock is already up more than 99% this year, I expect it to continue on this trajectory going forward. I declared my confidence in the company back in March when I wrote, "Monster Beverages has proven itself against industry leaders such as Coke and Pepsi to create a recognizable brand, which is why I'm drinking the Kool -- excuse me, the Monster -- and giving the stock a three-year 'outperform' rating on my profile in Motley Fool CAPS."
I stand by that decision today. However, if you're not yet ready to energize your portfolio with this monster stock, then I encourage you to add it to My Watchlist -- the Motley Fool's free tool that lets you track and monitor your favorite stocks.
- Add Starbucks to My Watchlist.
- Add PepsiCo to My Watchlist.
- Add Monster Beverage to My Watchlist.
- Add Coca-Cola to My Watchlist.