The Bull Case for Celsius Holdings

While Celsius was founded all the way back in 2004, the fitness-centric energy drink company has recently boomed in popularity — not only in stores, gyms, and vending machines nationwide, but also on the New York Stock Exchange.

So what is the bull case for Celsius Holdings, and is it an argument worth siding with?

 

Celsius Holdings Sales Up 120% YoY

Over the course of the past couple of years, Celsius Holdings stock has been on quite the ride.

The stock has gone from as low as $4 a share in August of 2019 all the way up to $78 in June of 2021, and while it has since dipped down to around $65 a share in the weeks since its peak, it’s showing plenty of potential to rise and exceed that previous high in the weeks and months to come.

This kind of upward trending reflects the company’s total sales for this second quarter of the fiscal year, which topped many experts’ expectations by coming in at $65.1 million for the quarter — this is up nearly 120% from one year ago, when the second quarter of 2020 earned the company $30 million in total.

Celsius Holdings Sales Forecast Is Stunning

Going forward, financial analysts have overwhelmingly positive predictions to make about Celsius Holdings.

Given the company’s immense success in the past several quarters, they forecast that Celsius Holdings will top $255 million in earnings by the end of the fiscal year. Going forward, analysts predict that Celsius Holdings will hit $383 million by the time 2022 comes to a close.

Compare this to last year’s totals, where the company reported $130 million in total revenue, and it’s easy to see why the bull case can be made for Celsius Holdings (CELH).

All of this success has the potential to take Celsius Holdings’ stock up from its previous high of $78 all the way up to $100 a share or more. This is exactly the kind of positive forecast that bull cases are defined by.

Celsius Holdings and the Supply Chain

It’s old news that supply chains all over the world have continued to see disruption on a scale once thought impossible. As a result, grocery stores, online retailers, gas stations, and even vending machines across the country have seen their supplies dwindle and their shelves go empty for weeks (and sometimes even months) at a time.

Celsius Holdings has also seen its deliveries hit a few snags (just like almost every other company in the food and beverage industries). In spite of this, though, Celsius Holdings has still managed to add its product to over 20,000 stores in the first six months of 2021 alone — This brings the grand total to over 100,000 stores.

Come fall and into 2022, Celsius Holdings only expects to see this number go even higher.

Celsius Holdings Expands To Europe

In the third quarter, Celsius Holdings has plans to launch in Europe — this planned expansion should do wonders for the total number of stores Celsius products are available in, and should also help to drive up the company’s total revenue (and, as a result, the price of Celsius Holdings stock, as well).

The company plans to use Amazon Europe in order to do this, a decision inspired by the company’s success on Amazon (AMZN) in the United States.

This expansion will take Celsius drinks to the United Kingdom, Germany, and all sorts of other European countries with the potential to make Celsius drinks more popular than ever before.

As this expansion unfolds, Celsius Holdings expects to find new retail partners and distributors. It’s quite the recipe for continued success.

Customer Loyalty Is High 

At the heart of Celsius Holdings’ success is a loyal customer base.

This kind of loyalty is essential for a company hoping to see success in the long term, and thankfully, Celsius has found it in a major way over the past couple of years.

This customer base has understood that supply chain issues have been rampant across the board, and they’re not rebelling because they can’t find Celsius drinks at their local grocer, gas station, or gym.

The customer base is expected to stick with Celsius even if the company decides to increase its prices anytime in the near future. Drink prices fluctuate, and Celsius is willing to change its prices depending on this fluctuation, though loyal customers are expected to be price insensitive.

The Recent Shift to Direct Store Delivery

To help alleviate some of these supply chain issues, Celsius Holdings has taken a proactive approach and decided to switch to DSD (or direct store delivery). This means that, instead of relying on another company to deliver the drinks to stores, Celsius is in charge of getting the drinks to the shelves with its own network of deliveries.

While the choice seems pretty major, it’s certain to make Celsius Holdings even bigger than ever before. The products can already be found in Targets, Walmarts, 7-Elevens, Krogers, Gold’s Gyms, CVS Pharmacies, and countless other retailers nationwide, and going DSD will only help the company expand to even more retailers across the globe.

The Ongoing Impact of COVID-19 on Celsius Holdings

The increase in COVID-19 variants is not something that Celsius Holdings is taking lightly.

The company has already made a point to continue to prioritize health and safety precautions in Celsius distribution centers and manufacturing centers, and this prioritization also carries over into its approach to any future shutdowns that may occur with gyms (a huge part of its market, to be sure).

Whatever may come, bullish investors have faith that Celsius Holdings knows how to face future challenges head-on.

The Bottom Line: What Is the Bull Case for Celsius Holdings?

Judging by Celsius Holdings’ excellent financials and its promising forecast, its expert handling of supply chain issues in the past and present and its confident European launch on the horizon, and the loyal base of customers that will follow the drink anywhere, it’s clear to see why so many investors have made the bull case for Celsius Holdings in recent months.

Combine this with the company’s switch to direct store delivery and its commitment to staying COVID-19 compliant, and Celsius Holdings is expected to be as bullish as it gets.

It will certainly be interesting to see how this health-conscious energy drink brand continues to grow in the months and years to come.

From a valuation perspective, the signs point to an upside of over 31% using a discounted cash flow analysis forecast.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.