As is often the case with story-driven growth stocks, bad news comes in waves. This was perfectly illustrated over the last few years with shares of Monster Beverage (NASDAQ:MNST), which corrected more than 40% in 2012 primarily on fears that the company's signature energy drinks were linked to heart attacks.

However, as the headline news began to subside along with consumers' fears, investors realized once again that Monster Beverage was an industry leader and an all around great growth company. With shares of the energy-drink developer/distributor now approaching all-time highs, the moment seems right to reconsider shares of Monster Beverage in the wake of the company's latest earnings report.

Source: Company Facebook Page

Solid industry positioning
Since establishing the Monster brand of energy drinks in 2002, Monster Beverage, formerly known as Hansen's Natural, has witnessed explosive growth as a market leader in caffeinated energy drinks.

According to Nielsen reports, the Monster Energy brand increased its energy-drink market share in gas station/convenience store settings to 33.9% in January, which is almost equal to main competitor Red Bull's 34.8% market share. Other competitors remain, but at significantly lower market share; 5-Hour Energy's market share was 9.6%, Rockstar's 8.5%, and NOS' 3.1%.

Monster growth
The most important aspect of the Monster Energy brand dominance is that it has allowed the company to expand into other beverage segments, most recently the large protein-drinks category. The company's protein brand, called Muscle Monster, has gotten off to a good start.

Monster Beverage Chairman and Chief Executive Officer Rodney C. Sacks explained, "Sales of our Muscle Monster line continued to gain traction. According to Nielsen reports for the 13 weeks through Dec. the convenience and gas channel, Muscle Monster was the second best-selling brand in the protein supplement sector and achieved a 22.8% market share."

Overall, Monster Beverage is projected to grow well in 2014, better than the closest comparable public companies like PepsiCo (NASDAQ:PEP) and Starbucks (NASDAQ:SBUX). The following is a breakdown of the three companies' projected growth in 2014: 

CompanyRevenue Growth 2014EPS Growth 2014
Monster Beverage 12.5% 26.2%
PepsiCo 1.3% 3.4%
Starbucks 11.4% 17.7%

*Starbucks fiscal year ends in September

Although much smaller than both PepsiCo and Starbucks, Monster Beverage is expected to outgrow its listed competitors by a wide margin for the most part. The company's earnings-per-share growth of 26.2% is particularly notable.

Earnings results
The company's recent earnings report showed solid year-over-year growth. Fourth quarter revenue rose to $621.1 million, up 14% from $545 million in the year-ago quarter. On a full-year basis, the company's total revenue growth of 9% was slower although still impressive.

However, the company's net income only grew 12% in the fourth quarter to $76.1 million from last year's $68 million. This slower growth was a result of a loss of certain tax benefits and higher litigation charges. The weak earnings performance helped to drive shares of Monster Beverage nearly 4% lower in after-hours trading on Friday.

This latest earnings report highlights the major negative facing investors interested in Monster Beverage; the company's ongoing legal battles and negative perception among regulatory officials.

Sacks explained, "Monster had to spend more than usual on litigation costs as it had to hire a number of lawyers for its case with the City Attorney of San Francisco, as well as other matters." He went on to assess the latest round of damage: "The legal costs during the quarter totaled $4.7 million, up from $1.4 million in the fourth quarter of 2012."

Bottom line
Monster Beverage is one of the most aggressive investments in the beverages industry. The company continues to benefit from its formidable positioning in the energy-drink segment and its popular image. Additionally, management is now leveraging that success to position the company for growth in new product categories.

However, the company also faces serious challenges in the way of mounting legal costs and negative public perception about its signature product line. As long as the risk remains, shares of Monster Beverage will likely trade at more depressed valuation levels than they should, and this means investors should consider the company for long-term growth on weakness.