In the following video, Jeremy Bowman and Isaac Pino discuss three reasons investors should sell or avoid Monster Beverage.
First is the fallout from deaths reportedly associated with drinking Monster energy drinks. The FDA has opened an inquiry, and the outcome is unpredictable. How the company responds to the investigation and negative press will affect its image and appeal.
Second, recent earnings growth has slowed and the stock price has declined. For years, Monster was on a tear; now it's looking more like a mature company in a maturing market. Past growth may be difficult to sustain in the future.
Finally, Monster, for all its success, is still a young company. Stability is not yet an asset. The company has experienced difficulty growing outside its original energy-drink market. The transition to a mature company competing with strong, well-established competitors may be problematic.
Isaac Pino has no position in any stocks mentioned. Jeremy Bowman owns shares of Chipotle Mexican Grill. The Motley Fool recommends Chipotle Mexican Grill, Green Mountain Coffee Roasters, and Monster Beverage and owns shares of Chipotle Mexican Grill and Monster Beverage. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.