Why Monster Beverage is a Stock Worth Watching
In the world of investing, certain stocks can be compared to hidden gems waiting for discovery. Time and again, I’ve brought attention to lesser-known companies that have outperformed the S&P 500, showcasing remarkable returns. Among notorious success stories like Casella Waste Systems, Comfort Systems USA, and Axon Enterprise, one name stands out in the energy drink sector: Monster Beverage (NASDAQ: MNST).
Exceptional Long-term Performance
Monster Beverage has skyrocketed over the last 20 years, delivering a staggering 7,000% return. Currently, the stock is climbing again, boasting a 20% increase in 2025, overshadowing a mere 2% gain for the S&P 500. This impressive performance beckons a closer look.
What Drives Monster Beverage’s Success?
A Compound Growth Story
According to MacroTrends, Monster has become the top publicly traded company of the past three decades. The secret behind this success? Exceptional growth. In 1994, Monster generated a mere $29 million in revenue, but by 2024, that figure surged to an incredible $7.5 billion, resulting in a 20% compound annual growth rate (CAGR).
A Pioneering Spirit
Monster’s story began in 1990 as Hansen Natural, a fruit juice company. The real turning point came in 1997 when it launched its first energy drink—a bold move during a time when the energy drink market barely existed. By 2002, the Monster brand had emerged, and the company never looked back.
Profit Consistency
Monster has not just been about growth; it has also maintained profitability. Between 2000 and 2010, the company displayed an impressive average profit margin of 11%, even as it expanded its footprint nationally and internationally.
Shareholder-Friendly Initiatives
Using its profits wisely, Monster has actively engaged in stock buybacks, reducing its share count by about 20% over the last nine years. Additionally, strategic acquisitions, like the purchase of the craft beer company now known as Monster Brewing Company in 2022, have diversified its business landscape.
Why is Monster Outperforming in 2025?
Monster Beverage’s resurgence in 2025 can be attributed to a few key factors:
Valuation Rebound: At the beginning of the year, the stock was trading at an unusually low price-to-sales (P/S) ratio of 7. Typically, it trends closer to 8 or 9. Fortunately, an uptick in sales growth in April revitalized investor confidence, driving the stock’s valuation back to normal levels.
Image source: YCharts- Solid Financial Standing: Despite variable growth rates, Monster boasts a pristine balance sheet, with nearly $2 billion in cash and only $200 million in debt. Furthermore, it reported over $1.5 billion in profits in the last 12 months.
Can Monster Continue Its Market Dominance?
However, it’s crucial to note some caveats regarding Monster’s future growth trajectory:
A Cautious Perspective
While the past has been stellar, recent performance indicates a single-digit revenue growth rate over the last three years. Even though recent sales growth was promising, management believes there has been a loss of market share in key distribution channels, such as convenience and gas stations.
Additionally, while diversifying into the beer sector seemed promising, sales in that category have declined, negatively impacting overall growth.
Limited Expansion Opportunities
Already the second-largest player in the energy drink market, trailing only Red Bull, Monster faces challenges in finding new growth avenues. With over $2 billion generated from international sales, the company is largely saturated in overseas markets, leaving limited room for expansion.
The Bottom Line
In summary, while Monster Beverage’s growth outlook might seem daunting, the combination of its financial strength and a proven track record compels us to keep a watchful eye on this stock. Investors should weigh the current challenges, but those with a long-term view might find opportunities, especially during market dips.
Monster Beverage has demonstrated resilience in the face of obstacles, and while other investment options may be more enticing at the moment, one should not underestimate the potential of a company with such robust fundamentals.
For further reading on stocks that are making waves, you can explore The Motley Fool’s insights.
Disclosure: The author has no positions in the stocks mentioned. The Motley Fool recommends Axon Enterprise, Comfort Systems USA, and Monster Beverage. For more about our disclosure policy, visit Fool Disclosure Policy.
