As beverage industry stalwarts like Starbucks and Coca Cola have proven, the world absolutely loves caffeine. Of course, this doesn't mean every stock in the space is worth your investing dollars, and there are certainly some from which I think you should stay as far away from as possible.
With that in mind, here are two highly caffeinated stocks to buy now, and one I'm convinced you should sell before the headache gets worse:
Mountains of profits, one cup at a time
First up, shares of Green Mountain Coffee Roasters (NASDAQ: GMCR ) may have risen 45% over the past month, but I'm convinced this stock has years of additional growth ahead before the buzz wears off.
The company crushed earnings estimates with its latest report after net income grew 42%, to $132 million last quarter, and adjusted earnings per share rose an even more impressive 60%, to $0.93, thanks largely to strong sales of higher-margin single-serve coffee.
Even better, as fellow Fool Blake Bos noted earlier this week, Green Mountain also extended its distribution partnership with Starbucks by five years in a "win-win" deal for both companies. What's more, Green Mountain is also planning to release new brewers next year, which will work with both its K-Cup and Vue Pack offerings, making it more convenient for new customers to join the Keurig Brewer bandwagon. As a result, management also raised EPS guidance for the year, and reassured investors that they still expect long-term growth between 15% and 20%.
Break out the bubbly
Next up, I think at-home carbonation specialist SodaStream (NASDAQ: SODA ) represents another great stock to buy now, especially considering that the company just told investors they think it's possible to increase annual sales by more than 80%, to $1 billion by 2016 -- not bad, considering the stock trades for just 29 times trailing earnings, and less than 20 times forward estimates.
Even then, however, SodaStream will still have only penetrated less than 2% of the 130 million households in the United States, a market currently dominated by both Coca-Cola and PepsiCo (NYSE: PEP ) . You can bet, though, that SodaStream management got the attention of Coke and Pepsi when they also stated recently that their long-term goal is to achieve 10% market penetration. If they can achieve even a fraction of that success, it would be an incredible feat, and would handsomely reward patient investors willing to buy the stock now.
Be afraid ... be very afraid
Finally, I'm going to step out on a pretty strong limb to say that Monster Beverage (NASDAQ: MNST ) is most definitely not a stock to buy now. While this energy drink specialist did manage to grow sales by 7%, to $484 million last quarter, analysts were expecting revenue of $501.7 million.
Even worse, thanks in part to litigation expenses related to defending its brand from a public that's skeptical of the safety of energy drink products, net income fell 16.6%, to $63.5 million, while earnings per diluted share fell 10.4%, to $0.37.
In the end, despite the fact that Monster has also approved another $200 million share repurchase program, its shares are still trading hands for nearly 32 times trailing earnings, and 23 times forward estimates. Unless the company can find a way to boost its stagnating sales, I think shares have a ways to fall before its valuation reflects reality.
However, if you're still wondering whether Monster Beverage is a value or a bust in the fast-growing energy drink category, consider our premium research report, which details all you need to know about Monster Beverage. Click here now to claim your copy and start reading today.