Shares of Monster Beverage (NASDAQ:MNST) have taken a serious haircut lately, and some are wondering if the run is over and this is the next Jones Soda (NASDAQOTH:JSDA). While Monster may have been priced a bit too close to perfection, it's no Icarus just yet. The company has effectively carved out a high-growth niche in the beverage arena that has a lot of staying power.
There is still a lot to like about this company as well. They sport a sterling brand, strong market position, and impressive margins. However, they could be even better.
While Monster Beverage has a comparably thin marketing budget, and counts a much lighter relative selling, general, and administrative expense load than Coca-Cola (NYSE:KO), Coke still has better margins. The key is Coke's enormous economies of scale and unmatched efficiency.
There are still a lot of similar efficiencies Monster could achieve, and now that shares are trading at lower multiples, the company could be a more appealing buyout target for Coke or PepsiCo (NYSE:PEP). The only question is whether the beverage titans are willing to pay a still pricey multiple for this high-growth cowboy.
One thing is certain, though: Monster will need Coke's help if it wants to make a splash in international markets and unseat Red Bull. There is no doubt that most of the growth in this space is found outside our borders.
But since there is still no indication of a marriage between these two yet, if you want international growth, you're better off with these "3 American Companies Set to Dominate the World." Click here to get your free copy of this premium research report before it's gone.
Austin Smith owns shares of Coca-Cola and PepsiCo. The Motley Fool owns shares of Coca-Cola and PepsiCo. Motley Fool newsletter services recommend Monster Beverage, PepsiCo, and Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.