Shares of Monster Beverage ( MNST -3.25% ) gained 12.9% in November 2018, according to data from S&P Global Market Intelligence. The energy drink specialist reported solid third-quarter earnings and also disclosed a simmering disagreement with distribution partner Coca-Cola ( KO -0.29% ), but investors quickly shrugged off the Coke dispute to focus on the upside.
Monster grew its third-quarter sales 12% above the year-ago result, landing at $1.02 billion. Earnings increased 20% to $0.46 per share. The earnings figure was right in line with analyst expectation, but Monster's top-line result was a positive surprise.
On the earnings call, Monster CEO Rodney Sacks said that Coca-Cola is working up two new energy drinks under its own familiar brands, possibly breaking a signed agreement to leave the energy drinks business to Monster and focus on less-caffeinated drinks under brands like Sprite, Coca-Cola, and Dasani. The soft drink giant claims that the distribution deal has an exception for cases like this, but the matter is going to arbitration.
Monster shares fell as much as 11.6% that day but recovered to a smaller 3.6% loss before the closing bell. Several analysts called it a buying opportunity and investors soon united under that bullish banner.
Monster is posting solid sales growth in America while rolling out distribution and marketing in new markets such as India, China, and Eastern Europe. The U.S. remains Monster's most important market by a long shot -- international sales accounted for just 25% of total third-quarter revenues.
The stock has traded largely sideways all year long after running 43% higher in 2017. The international growth opportunities should provide plenty of fuel for Monster's fires next year, and I'd be shocked if Coke actually launched another line of energy drinks and actually made a dent in Monster's and Red Bull's market-leading sales. In short, November's positive stock chart makes a lot of sense.