Monster Beverage (MNST -2.17%) finds itself at the center of much debate, mostly pertaining to drink safety. However, despite any potential health concerns, the company continues to grow its top and bottom lines in the face of a difficult macroeconomic environment. We'll take a look at how, as well as if, this trend is likely to continue.

Company strategy
Monster aims to be different than its peers. Its marketing approach is to expose the company's products to young consumers through radio and T.V. personalities, and by making appearances at concerts, extreme sporting events, and college campuses. Monster will sometimes hand out free beverages at events in order to increase brand visibility. And if you happen to be near a college campus, or a location where concerts and/or events that attract young people are held, then you might have seen Monster-branded vehicles driving around.

This approach sounds very similar to Red Bull, the leading energy drink company. However, since Red Bull is a private company, it won't be a focus here. While Monster might be second in the energy-drink market, that's not a bad place to be. It has been proven that there is plenty of room available for both Red Bull and Monster.

Monster's growth strategy is twofold. One, it's continuously looking to expand internationally. Monster already has a strong domestic presence, as well as in Australia, Japan, and South Africa, but it wants more, which should continue to boost top-line performance. Two, it looks to grow through innovation. For example, Monster has introduced several new beverages over the past six months:

  • Monster Minis (12-packs in 8oz. cans)
  • Peace Iced Tea
  • Muscle Monster Energy Drinks
  • Monster Rehab Tea + Pink Lemonade + Energy
  • Java Monster Kona Cappuccino
  • Hansen's Sparkling Beverages (10-calorie beverages with all-natural sweeteners)
  • Peace Tea Peach & Sno-Berry (ready-to-drink iced teas)

(Source: 10-Q)

Several of these products have the potential to increase the company's targeted customer base. It should also be noted that Monster Energy Zero Ultra Blue, launched in Q3 2012, has been one of the company's best sellers. Therefore, Monster is likely to market it more going forward.

Another strategy for Monster is to alter its labeling and graphics. However, this isn't likely to play as much of a role as international expansion and innovation.

Recent results
In the second quarter, Monster had to deal with a $3.6 million loss related to foreign currency transactions, a $5.0 million loss for litigation services related to the marketing and safety of its products, and a $2.0 million loss due to distribution transitions. Despite all of this, Monster still managed to deliver a record quarter, with gross sales jumping 6.6% year over year to $732.9 million. Gross sales are an important stat for Monster because they exclude promotions. Diluted earnings per share also increased 3% to $0.64. Monster attributed the improved performance to increased consumer demand on a global scale, as well as international expansion.

Monster vs. peers
If you're an investor, then when you think of Monster, you might also consider Coca-Cola (KO 0.31%) and PepsiCo (PEP -0.41%). Of course, due to its youth, Monster is going to offer more growth potential than Coca-Cola or PepsiCo, but that doesn't mean it's likely to be a better long-term investment. 

Monster might have marketing power, but it's nothing compared to the marketing power of Coca-Cola. And while Coca-Cola is performing well in the "still beverage" category, it's seeing consistent volume declines in "sparkling beverages," mostly due to more health-conscious consumers. Therefore, Coca-Cola might choose to up its game in the energy-drink market in order to improve top-line growth. Coca-Cola already has a distribution relationship with Monster, and Coca-Cola wants to be a bigger player in the energy drink market. This has led many people to believe that Coca-Cola might one day purchase Monster. However, this deal would come with a hefty price tag, and Coca-Cola isn't going to make a move like this unless its certain of Monster's growth potential. 

Coca-Cola currently has NOS, Full Throttle, Power Play, and Mother energy drinks, but it doesn't market them aggressively. Pepsi has AMP, but like Coca-Cola, PepsiCo's attempt at capturing significant market share in the energy drink market hasn't gone as planned. However, Pepsi is the most diversified company of the bunch, mostly thanks to its strong snack position. But it also owns Tropicana, Gatorade, Aquafina, Sobe, Sierra Mist, and more.

From a valuation standpoint, Monster is trading at 35 times earnings, whereas Coca-Cola and PepsiCo are trading at 20 times earnings and 19 times earnings, respectively. Monster has no long-term debt, which is a big positive, but it doesn't offer any yield, whereas Coca-Cola and PepsiCo yield 2.9% and 2.8%, respectively. Therefore, if these stocks aren't moving, you will at least be rewarded for your patience.

Conclusion
If you're willing to roll the dice, then Monster might be a good investment option for you. The majority of the stock's run over the past several years looks to be complete. But Monster is very good at marketing its brand in a cool and effective manner. Therefore, upside potential exists, especially considering the company's international expansion plans. If you're looking for steadiness and safety, consider Coca-Cola or PepsiCo.