Shares of energy drink company Celsius Holdings (CELH +1.68%) jumped 74% in 2025, compared to just a 16% gain for the S&P 500. For me, it wasn't very surprising -- I fully expected the stock to rebound as it did.
Celsius' growth stalled in 2024, resulting in a 52% decline in the stock that year. But on Dec. 22, 2024, I wrote: "Once the growth numbers perk back up, investors could start believing in this long-term growth story again."
Well, growth did pick back up for Celsius in 2025. Through the first three quarters of the year, the company has reported 75% top-line growth. Granted, I didn't know the company would grow by this much. But I was fortunately able to see an opportunity that others missed.
Image source: Getty Images.
What did investors miss in 2024?
In the third quarter of 2024, Celsius' quarterly revenue dropped year over year for the first time in years. Management nonchalantly blamed it on fluctuations in inventory with its largest distributor, PepsiCo. But investors weren't buying it. For many, the 31% drop in Q3 revenue was a sign that people were no longer drinking beverages from Celsius.
Of course, if this fear was true, then Celsius' business would have been in big trouble. The stock would also have been in big trouble, given the correlation between business results and stock price. But I took a different view, believing consumers still had a taste for Celsius' beverages.
NASDAQ: CELH
Key Data Points
It wasn't just faith on my part. On the contrary, the numbers supported my view. Celsius' market share was increasing, products were getting greater distribution, and end-consumer sales volume was strong. Moreover, management's explanation sounded reasonable -- it can be hard for a distributor to maintain exactly the right amount of inventory with a high-growth brand. PepsiCo plausibly miscalculated and could easily resolve the temporary issue.
After a terrible year in 2024, I believed Celsius stock would rebound in 2025, which is why I bought more shares of the beverage stock on Jan. 17, 2025. Looking back now, I'm sure glad I did.
Celsius bounces back in 2025
The top-line growth numbers for Celsius in 2025 are sensational. But there's admittedly an important asterisk there: The company acquired fellow beverage brand Alani Nu for $1.65 billion in April. Inorganic growth doesn't reflect the health of the business as well as organic growth does. Moreover, acquisitions come with financial and integration risks.
However, Celsius continues to grow its namesake brand in 2025, confirming that management truthfully highlighted a temporary inventory issue, not a permanent consumer issue. In the 13 weeks leading up to Sept. 28, Celsius brand retail sales grew 13% year over year, a strong growth rate for its scale.
Investors now realize that Celsius stock was unjustly sold off in 2024. Customers didn't move on, and the business continues to grow. This is why the stock was able to regain ground in 2025.
What about 2026 and beyond?
Celsius still has a long runway for profitable growth if things go right, which is why I'm excited to continue holding shares of this company.
There are several growth levers for Celsius, including its Alani Nu brand. I initially worried that the up-and-coming brand would cannibalize Celsius' sales, but so far it hasn't. The Celsius brand has continued to grow, even as Alani Nu's third quarter net sales were up 115% year over year.
The shocking thing here is that Alani Nu entered PepsiCo's distribution system after the quarter ended. Celsius' management says that entering PepsiCo's system "is expected to expand Alani Nu's reach and accelerate its growth trajectory." If Alani Nu's growth continues to accelerate as management says, it would be good news for Celsius' overall growth rate.
The other big growth lever for Celsius is international expansion. It's entered several new markets in recent years, but Q3 international revenue was still only 3% of total revenue. In other words, its growth abroad is only beginning.
In short, Celsius' revenue continues to soar, and between Alani Nu and international markets, the uptrend is poised to continue in 2026 and beyond. Meanwhile, the valuation, at a price-to-sales (P/S) ratio of 6, has become attractive. The chart below shows that the current valuation is well below the 10-year average for Celsius stock.
CELH Revenue (TTM) data by YCharts.
I'd love to see Celsius stock go up by 74% again in 2026, but I won't hold my breath. That's a world-class return for a single year, and almost anything can happen over that relatively short time horizon.
Therefore, I'll keep a five-year time horizon, because it's the Foolish thing to do. Looking out over the long term, I see plenty of growth for Celsius, which should help Celsius stock stay a market-beating investment.
