Name: Monster Beverage Corp
Ticker: MNST
Price: $91.38
Sector: Consumer Staples
P/E: 36.09
Monster Beverage Corp is a company that makes & sells energy drinks. Their flagship brand is Monster Energy, accounting for 95% of their sales. Monster Beverage was founded in 1935, although the company only started selling the Monster Energy brand in 2002 and in 2012 changed their name from Hansen's to Monster Energy. In 2015 the company sold off its Hansen's juices to Coca-Cola. The largest share holder of Monster Beverage Corp is Coca-Cola, at a 19.3% stake in the company. In 2014, Coca-Cola and Monster Beverage formed an agreement for Coca-Cola to become Monster's preferred distribution partner and Monster to become Coca-Cola's sole play in the energy drinks market.
Monster has expanded their list of energy drink brands to include:
Monster Energy
Reign
Predator
Relentless
Mother
Burn
NOS
Full Throttle
The recent acquisition of CANarchy, the craft beer and hard seltzer company will add Oskar Blues, Cigar City Brewing, Squatters, Wasatch, Deep Ellum brewing company , & Perrin Brewing Company brands to Monster Beverage.
CANarchy is a top 5 US craft brewery with 7 factories and 566 employees. The CANarchy acquisition marks Monster's planned expansion into the alcoholic beverages market.
Meanwhile in the energy drinks industry Monster and Redbull are the leading energy drink brands by far, with Redbull slightly edging Monster to the #1 spot in the US. If you counted all of Monster's brands then Monster would be the leading energy drink company in the United States. Meanwhile in Europe Redbull has the advantage, although Monster is catching up fast, as shown by its 15.39% Revenue CAGR over the last 5 years.
Monster's management is supreme, with the founders (Rodney Sacks & Hilton Schlosberg) of Monster Energy still at the helm today, so we can be assured that Monster's future is in safe hands. The founders own a combined total of 18% of the company so they have tons of incentives to lead Monster well.
Monster retains a ROIC of over 20% most years, and with a strong balance sheet, I do not see this company seeing any trouble in the near future.
The P/E of 36 isn't making me a big fan of $MNST's price right now, but i am a fan of the business and I will buy in when it falls.
Through all this I have concluded that the business is great but the price is putting me off – I have lots of time to wait for a better entry point as the moat of Monster won't get eroded easily. As Charlie Munger says, “The big money isn't made in the buying or selling, it's made in the waiting” – and that's exactly what I plan to do with Monster Beverage Corp.
Cross-posted from r/HoldForeverInvesting
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