Shares of Monster Beverage (NASDAQ:MNST) have been nearly flat for two years, compared to an S&P 500 that's up more than 30%. But that's not because the company isn't strong and growing. The major beverage companies, including Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP), have failed to box Monster out. Now, one of their only hopes for securing a place in the market might be to buy Monster.

There's a new Monster on the block
Herb Greenberg has called Monster out as one of his great mistakes. He thought the major beverage companies would crush Monster, because the big soda companies have unrivaled distribution channels. This hasn't happened. Monster remains the market leader, beating out the likes of Red Bull.

During the last 10 years, Monster has grown revenues at an annualized 35%. That's the kind of growth that PepsiCo and Coca-Cola would love to have. PepsiCo has only managed to grow revenues at 8% annualized, and Coca-Cola at 9%.

A Monster acquisition in the making?
Monster has no debt, and a market cap that's $10 billion. PepsiCo has nearly that much cash on its balance sheet, and Coca-Cola has twice that.

Monster is also already in some 100 countries. So the fact that PepsiCo and Coca-Cola have a broad geographical reach gives them little advantage over Monster. Monster just expanded into India, and it's already been successful with diffusion across Europe, Brazil and Japan.

A buyout of Monster would mean the most for Coca-Cola, which is more heavily tied to beverages. Coca-Cola has four of the world's top five beverage brands. Meanwhile, PepsiCo still has a key growth opportunity with expanding its snacks business into untapped developing markets. PepsiCo already gets around half its revenues from outside the U.S.

Even still, an acquisition of Monster would be a key growth driver for either company. The North American beverage business is somewhat saturated, and business is slowing. The carbonated soft-drink market has been in decline for nine straight years as of 2013. Coca-Cola did manage to see a 2% rise in volumes during the first quarter on a year-over-year basis. That comes as sales were up in Brazil and China, but growth was flat in North America.

The other key reason that Coca-Cola needs Monster more than PepsiCo does is that Coca-Cola is the distributor for half of Monster's beverages in the U.S. Should Coca-Cola lose this business, it would also stand to lose more than 10% of its North American operating income.

How shares stack up
Monster's shares are still nearly 20% off their all-time highs of around $79. The stock also only trades at a P/E ratio of 22 based on next year's earnings estimates. That's well below its average P/E of 28 for the last 10 years. Both PepsiCo and Coca-Cola currently trade with a P/E of around 20, despite the fact that Monster is expected to grow earnings at a rate well above the two. Analysts also have a mean price target of $78.

Bottom line
Monster can provide a lot of value to one of the major beverage companies. But it's also a very reasonable investment on its own. Energy drinks are still being well received and remain highly popular. Investors who are looking to gain exposure to the high-growth alternative beverage market should have a look at Monster.

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Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, Monster Beverage, and PepsiCo. The Motley Fool owns shares of Coca-Cola, Monster Beverage, and PepsiCo and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.