Shares of healthy energy drink maker Celsius Holdings (NASDAQ:CELH) have fizzled in recent weeks following the company's takeover of Func Foods. While investors found the move to be less than funky on account of the assumed debt and an associated secondary share offering, Celsius has interesting growth metrics and recent trading developments that suggest the stock may be worth a sip.

Record second-quarter revenue of $16.1 million reported Aug. 8 marked an increase of 73% over the same quarter last year. Gross profit rose 70% thanks to an expansion of the company's distribution channels and solid consumer thirst for Celsius products.

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An energetic business

Celsius is one of many companies jumping on board the global wellness revolution; in its case, that's through its flagship Celsius energy drinks. The sleek-canned, non-carbonated beverages use a proprietary, clinically proven formula that accelerates metabolism, burns body fat, and provides healthy energy. The company also serves up a carbonated pre-workout variant called Celsius Heat.

Although the healthy beverage industry has become extremely crowded with companies including New Age Beverages (NASDAQ:NBEV) and Reed's (NASDAQ:REED), Celsius has had success in grabbing shelf space. Its sells its products to grocery stores, drugstores, convenience stores, wholesale clubs, and health and fitness chains and has been able to grow brand awareness and sales by expanding outside the U.S. into markets such as Sweden, Finland, China, Hong Kong, Singapore, and Kuwait.

In the 52 weeks ending Aug. 11, Celsius had year-over-year sales growth of 39.5% in the energy convenience channel, outpacing the industry in volume growth. Management also recently announced the addition of more than 3,200 new convenience store locations to its distribution network, including 7-Eleven, Circle K, and Pilot Flying J, as convenience stores look for ways to integrate performance energy brands.

Expanding global presence through vertical integration

On Sept. 11, Celsius announced plans to acquire Finland-based Func Foods for $24.6 million, which included the assumption of $9.5 million in debt. Cash-strapped Func has struggled with its debt load in recent years, and this was having a negative effect on its distribution in the Nordic region. The buyout expands Celsius's European presence and is a step toward vertical integration, as Celsius has had a distribution relationship with Func for several years. The deal gives Celsius control of distribution in its key Scandinavian market, and it offers management the opportunity to right the ship at Func.

On the same day, Celsius also announced a $25 million secondary share offering at a price of $3.60, most of which will be used to fund the acquisition. While Celsius took on a significant amount of debt and diluted its shares in the process, its pre-acquisition balance sheet did not have much debt, and the acquisition is expected to be immediately accretive to Celsiuis's bottom line. 

Insiders wouldn't turn down a refill

It can be a comforting sign to investors when corporate insiders have skin in the game. Celsius insiders have been actively buying the company's stock since the Func Foods acquisition, which may be a sign of confidence in the buyout and growth prospects of the company. Since Sept. 12, four different insiders have snatched up Celsius shares totaling over $19 million, including a nearly $7 million purchase from director William Milmoe.

In addition, well-known hedge fund manager Mario Gabelli initiated a small purchase of Celsius at his Gamco Investors group, which bought approximately $53,000 worth of Celsius shares during the second quarter.

Potential short squeeze adds to the intrigue

Celsius is thinly traded, with a float of about 16.4 million shares. Company insiders own well over half of the roughly 57 million shares outstanding. The latest data from Nasdaq shows that short interest on Celsius has reached more than 3.1 million shares, or about 19% of the publicly available share count. A positive news headline for the industry (or company) could leave short sellers scrambling and spill over into a significant short squeeze event for the beverage maker's stock.

Is this a healthy investment?

Celsius may be an interesting, albeit rather speculative, consumer-staples play. The stock has been as cold as its beverages of late, but the sell-off may be overdone given the strength of the business's fundamentals. Celsius appears to offer a more attractive risk-reward profile than other emerging beverage players due to its distribution expansion rate, volume growth, and lower volatility. In an industry that has seen its share of consolidation in recent years, Celsius could also be an attractive acquisition target for a company looking to gain global exposure to the growing healthy energy drink market. There are high competitive risks in this space, but for the aggressive growth investor, Celsius may be a stock to get energized by.