5. Celsius Holdings, Inc. (NASDAQ:CELH)
Analyst Upside Potential: 73.97%
Number of Hedge Funds: 27
Celsius Holding (NASDAQ:CELH) develops, processes, markets, sells, and distributes functional energy drinks to various consumers. It markets its flagship asset, CELSIUS, as a fitness drink or supplement that accelerates metabolism and burns body fat with exercise while providing energy. The company’s product formulation includes supplements and ingredients such as green tea (EGCG), calcium, ginger, B vitamins, vitamin C, and chromium. The product line is marketed in two versions: a ready-to-drink version and an on-the-go powder form.
The company also offers a new CELSIUS Essentials line, marketed in 16-ounce cans. The products are available in retail channels across the US and certain markets in Europe, Canada, the Middle East, and Asia-Pacific.
Celsius Holding (NASDAQ:CELH) has a strong operational model and is running on positive fundamentals. Its second-quarter experienced positive momentum across profit, revenue, and gross margin in an otherwise challenging macro environment. Although the company experienced unanticipated and systematic category growth pressure, it remained resilient, delivering innovation, expanding its in-store shelf presence, and bringing new consumers into the category. It contributed to 47% of all category growth in Q2, making the company the clear category growth leader.
Total revenue for Q2 experienced a 23% year-over-year growth, reaching $402 million. Total revenue for the first half of 2024 increased by 29% to $757.7 million. Similarly, international revenue increased 30% in the quarter, reaching $19.6 million. This growth was supported by significant shelf space gains during the seasons, shelf resets, and a more than 35% increase in the company’s average SKUs sold per store. These numbers came from Circana’s first four-week read ending July 14, 2024, compared to the last four weeks ending December 3, 2023. Within the convenience channel, its average SKUs selling per store grew by 43% in the same time frame.
Celsius Holding (NASDAQ:CELH) has plans to counter the increasing competition in the market. It is continuously adding resources across merchandising, sales, key accounts, and field marketing.
Alger Small Cap Growth Fund stated the following regarding Celsius Holdings, Inc. (NASDAQ:CELH) in its Q2 2024 investor letter:
“Celsius Holdings, Inc. (NASDAQ:CELH) engages in the development, marketing, sale, and distribution of functional drinks and liquid supplements. It also offers post-workout functional energy drinks and protein bars. During the quarter, shares detracted from performance after the company reported fiscal first-quarter revenues below analyst estimates. The revenue shortfall was attributed to ongoing inventory management challenges with PepsiCo, which decelerated year-over-year revenue growth from over 100% to approximately 37%. Despite the slowdown in near-term growth, we believe Celsius remains well positioned to potentially capture market share within the large energy and soft drink industry over the long term.”
