Until fairly recently, energy drink maker Monster Beverage (NASDAQ:MNST) was a plucky little upstart, chasing extreme revenue growth as energy drinks inched their way into the global mainstream. Fast-food giant McDonald's (NYSE:MCD) hasn't been "plucky" or "little" for several decades. These days, the two companies have a lot in common, and you may find yourself struggling to choose which one's the better fit for your own portfolio.

By the numbers

Operating Metric

McDonald's

Monster Beverage

Trailing revenue

$20.8 billion

$4.3 billion

Trailing free cash flow

$5.3 billion

$1.0 billion

Cash equivalents

$5.4 billion

$1.3 billion

Long-term debt

$34.8 billion

$0

Data source: collected from Morningstar on May 12, 2020.

Reflecting their relative levels of maturity, McDonald's runs a very large and capital-intensive business, while Monster's playbook is leaner and meaner.

Don't worry too much about the heavy debt load at McDonald's. The company is still good for an investment-grade credit rating, and its torrential cash flows could be used to pay these debt balances down to zero in less than a decade. That's just not how McDonald's prefers to run its balance sheet, as it uses financial leverage to make its day-to-day business decisions more flexible.

That being said, Monster's debt-free balance sheet offers a different type of flexibility. This company doesn't have to worry about fulfilling debt covenants at all times, which opens the door to all sorts of interesting ideas. If distribution partner Coca-Cola (NYSE:KO) wanted to step up its 19% ownership to a full-fledged buyout, for example, Coke wouldn't have to take over any debt arrangements.

Business trends

Monster's year-over-year revenue growth has landed north of 10% in all but two quarters in the past three years. Meanwhile, McDonald's has been more likely to shrink than grow:

MCD Revenue (Quarterly YoY Growth) Chart

MCD Revenue (Quarterly YoY Growth) data by YCharts

The Golden Arches still carry the larger annual revenue stream in this comparison, and it isn't close. However, Monster is still getting bigger in the long term and McDonald's just isn't:

MCD Revenue (TTM) Chart

MCD Revenue (TTM) data by YCharts

The COVID-19 health crisis changed the game for both of these companies, of course.

McDonald's entered 2020 on an updraft, showing 7.2% higher comparable-store sales in January and February. That momentum vanished in March, and comps fell 3.4% in the first quarter as a whole.

Monster saw no significant damage to its bottling and distribution pipelines in the first quarter, but foot traffic to important sell-through points such as convenience stores and gas stations crumpled in April. Monster's energy drink sales through this channel fell 14.4% year over year last month.

Looking ahead, McDonald's management believes that the fast-food world has been permanently changed by the coronavirus and it will take some time to adapt to the new market reality.

"We do know that customers will not immediately revert back to their pre-shutdown routines. For example, we know that breakfast will be the most challenged daypart," CEO Chris Kempczinski said in the first-quarter earnings call. "As I said earlier, we entered this crisis with a solid foundation. While we face significant disruptions and challenges, we remain confident in our ability to adapt, as we've done throughout our 65 years to secure our long-term success."

Monster CEO Rodney Sacks saw fewer long-term issues related to the COVID-19 health crisis.

"We reiterate that sales over a short period such as a single month or even two months should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period," Sacks said on Monster's first-quarter call. "We continue to believe in the company and our growth strategy and remain committed to continuing to innovate, develop and differentiate our brands and to expand the company both at home and abroad and in particular, expand distribution of our products through the Coca-Cola bottling system internationally."

A smiling businesswoman sits at her laptop, throwing many hundred-dollar bills up in the air.

Image source: Getty Images.

Final verdict: Most investors should prefer Monster

In my view, there's really only one reason to prefer owning McDonald's instead of Monster Beverage. The burger chain offers a generous effective dividend yield of 2.8% right now, and Monster doesn't pay dividends at all. So if you're looking for a massive cash machine that should be able to fuel bounteous dividend payouts for years to come, McDonald's would be it.

Other than that, Monster offers high growth and a lightweight business model, easily changed to adapt to rapidly changing market conditions. The distribution partnership with Coca-Cola was a game-changer in 2014 and continues to drive Monster's global growth today. So if you want your stocks to deliver more than a steady dividend check, Monster is poised to deliver strong long-term stock returns.