This century's best-performing US stock sells energy drinks, not iPhones
- Monster's shares have rocketed 60,000% since their public debut in 2003, besting all other US shares this century.
- The energy-drinks company has grown revenues by at least 9% every year since 2001, and increased earnings annually since 2008.
- However, competitors such as Monster shareholder and distributor Coca-Cola have put pressure on its stock price.
- Watch Monster trade live.
This century's best-performing US stock isn't Apple, Google, Amazon or another of the usual suspects. It's Monster Beverage, which has rocketed 60,000% since its public debut in 2003, surpassing all other stocks in the S&P 500.
Monster, which changed its name from Hansen's Natural in 2012, sells various drinks under brands such as Monster Energy, Java Monster, Muscle Monster, NOS, Burn and Full Throttle. Its share price has surged from below $0.10 in January 2003 to more than $54, lifting its market value from less than $1 million to more than $29 billion.
The California-based company's unparalleled stock rally reflects its steady growth. It has boosted revenues by at least 9% every year since 2001 and increased earnings annually since 2008, according to Bloomberg. Net sales rose 13% to $3.8 billion in 2018, which combined with lower income taxes to drive net income up 21% to $993 million.
Monster remains one of the biggest players in energy drinks. It commanded a 35% share of the energy-drinks market in March, close to archrival Red Bull's 38%, according to all-channel IRI data reported by Bloomberg.
The group's shares hit a record high of almost $69 in January 2018 but have fallen in the face of rising competition. Coca-Cola, its largest shareholder with a near-19% stake and a key distributor, recently announced the launch of Coca-Cola Energy drinks in the UK.
Bang, an energy drink owned by healthcare group Vital Pharma, has also taken market share from Monster. Citi analyst Wendy Nicholson recently cut her price target for Monster stock from $74 to $66 as competition "remains stiff in the near term," according to Bloomberg.
Monster's efforts to fend off competition and maintain growth have taken several forms. It raised the price of its Monster Energy drinks by 4% in the US in November, bringing them closer to Red Bull. Last month it launched Reign, a more affordable energy-drink brand designed to rival Bang, according to Bloomberg.
It has also expanded into new channels such as foodservice, e-commerce and home-improvement stores. Moreover, it's bolstering its international presence: it plans to launch Monster drinks in the Dominican Republic and Paraguay this quarter, and it released Monster Ultra Light in China late last year to appeal to its "primary target of young affluent customers," according to the company's fourth-quarter earnings call.
Smartphones, search engines and "everything stores" are all well and good, but energy drinks are for now at least, proving a great way for companies to deliver shareholder returns.
