Celsius Holdings (CELH 5.79%) has crushed the market in recent years. The stock of the fast-growing energy drink brand is up 3,900% in the last five years, while the S&P 500 has produced less than 100% returns for investors. With smart marketing and increased distribution, Celsius has helped grow and steal market share in the energy drink category, with most of this growth coming in the United States.

Now it plans to keep this party going, with a little help from PepsiCo. Where will that put Celsius stock in two years, at the end of 2025? Let's take a closer look and find out.

Triple-digit growth at scale

The key to Celsius's stock returns has been extremely fast revenue growth. In Q3 of 2023, the company's revenue grew 104% year-over-year to $385 million, with 96% of sales coming from its North American segment. Since the beginning of 2020, Celsius has grown its quarterly revenue at or above a 50% year-over-year rate every single quarter, bringing its annual revenue from under $100 million to over $1 billion in just a few years time.

How has it grown so quickly at scale? A few reasons. First, the brand found a great fit with people who traditionally avoided sugar-laden energy drinks: fitness enthusiasts. Celsius is marketed as a healthier energy drink than the traditional products out there, convincing people to use it instead of traditional sports drinks like Gatorade. Second, it partnered with tons of athletes, social media health influencers, and sports teams to flood the market with Celsius advertisements. A continued presence and branding have helped Celsius build incredible momentum among consumers, which is why it continues to gain market share in the energy drink category.

Perhaps most important was a deal with PepsiCo to bring Celsius onto its distribution platform. This enabled Celsius to get prime placement in grocery stores, convenience shops, and gas stations, which are vital for consumer packaged goods (CPG) brands. It also helped with profit margins. In Q3 of 2023, Celsius posted a gross margin of 50.4%, up from 41.8% last year.

Can success be repeated internationally?

With $1 billion in annual sales, Celsius's business in the United States is getting mature. For reference, one of its top competitors Monster Beverage does $7 billion in yearly revenue and has a major global presence. Going forward, it wants to make big strides in expanding the Celsius brand outside of its home country.

A major announcement was made a couple of weeks ago related to this expansion. Celsius announced a distribution expansion with PepsiCo in Canada and a partnership with a local distributor in the United Kingdom and Ireland to fuel international growth. With a combined population of over 100 million, there is a huge opportunity for Celsius to repeat its success in these other regions.

In future years, investors should expect Celsius to launch in other markets around the world, with other English-speaking countries such as Australia and New Zealand likely up first. There is also plenty of room to still grow in the United States. Add everything together and I think Celsius can keep growing revenue at a high rate for a long while.

CELH Operating Margin (TTM) Chart

CELH Operating Margin (TTM) data by YCharts

The stock looks expensive, but is it really?

At today's market cap of $12.3 billion, Celsius stock trades at a nosebleed price-to-earnings ratio (P/E) above 100. Some investors might look at this number and immediately think Celsius is overvalued.

But smart investors know that it pays to look into the future, not the past. Just looking one year out, Celsius's forward P/E drops to 50, with analysts expecting fast levels of revenue growth to continue in 2024. If the company can triple its revenue over the next two years -- a doable feat given its current growth rate -- Celsius will do around $3.3 billion in sales in 2025. Assuming the company can expand its profit margins to the 25% level of Monster Beverage, Coca-Cola, and other CPG giants, that equates to $825 million in 2025 earnings, or a two-year forward P/E of just 15.

I don't think Celsius stock is dirt cheap at these levels, but it is not expensive either. If you are confident the company can keep up this impressive growth rate, Celsius stock will likely be much higher at the end of 2025.