Health-oriented energy drink brewer Celsius companies (NASDAQ: CELH) has seen better days. The stock was trading near a two-year low on November 20, more than 70% below the record prices reached at the end of May.
And the stock price is down for good reasons. The valued distribution partnership with soft drink and snack giant PepsiCo turned out to have a downside. Pepsi is revamping its inventory pipeline, dramatically reducing Celsius orders. As a result, Celsius’ massive sales growth turned into a 31% year-over-year decline in its latest earnings report.
Do you miss the morning spoon? Wake up with Breakfast news in your inbox every market day. Register for free »
But this seems like a good time to pick up some Celsius shares on the cheap. These stocks look good for many reasons, but one catalyst stands head and shoulders above the rest. I’m talking about the company’s potential for international expansion.
Celsius is an all-American company so far. Start-ups in Canada, the British Isles, Australia and New Zealand are hardly moving the financial statements. International sales accounted for just 5.3% of the company’s total sales in the first three quarters of 2024. Yet foreign sales grew 36% year over year during this period, while domestic sales increased only 5% due to Pepsi’s inventory shift.
So Celsius investors are focusing on the soft US sales right now, and why not? In any case, that’s where the financial action takes place. So it makes perfect sense to send Celsius’s stock prices down steeply at a time of domestic strife.
But the long-term opportunities abroad are enormous. PepsiCo is Celsius’ preferred distribution partner on a global scale, and that partnership has not yet started. The international opportunities are enormous in the energy drink sector – arch rival Monstrous drink generates 38% of its sales from foreign markets, with vibrant growth in Europe and Asia.
The company has barely started spreading its health-conscious spin on energy drinks. I expect big things from Celsius’ international expansion efforts. Swooning stocks should bounce back as Pepsi’s stock action becomes old news, followed by strong gains on rising international sales.
Before purchasing shares in Celsius, please consider the following:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Celsius wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
