Monster Beverage Corp (MNST), The Coca-Cola Company (KO) and PepsiCo, Inc. (PEP): Will Energy Drink Sales Surpass Traditional Colas?

In addition, The Coca-Cola Company (NYSE:KO)’s 10% increase in dividend payout also has the potential to satisfy its shareholders, providing an annual dividend yield of 2.7%. Coupled with a share price that is expected by analysts to increase by more than 8.5% over the next 12 months, this old cola-wars competitor is hanging tough.

Growing company

Likewise, PepsiCo, Inc. (NYSE:PEP) is also keeping itself above board by growing company revenue and operating cash flow. Here too, though, PepsiCo, Inc. (NYSE:PEP) isn’t just relying on sales of its old tried-and-true products to keep it strong. This competitor has also become tough in its snack-foods division, with impressive year-over-year results in this division’s profits. This also likely contributed to the company’s overall 12% rise in profits for 2012.

PepsiCo, Inc. (NYSE:PEP) currently has a cash-flow margin in the low teens, a tad lower than The Coca-Cola Company (NYSE:KO)’s margin in the high teens. But PepsiCo, Inc. (NYSE:PEP) makes up for that loss by growing sales at a faster rate than its rival.

Still, high commodity costs, a fierce competitive environment in the emerging markets and ever-increasing advertising costs could weigh on the future EBITDA margin. But PepsiCo, Inc. (NYSE:PEP) has recently announced a multi-year cost-synergies program that will generate almost $2 billion of cost savings by the end of next year. This will help PepsiCo to improve its operating margin.

Just like with Coca-Cola and PepsiCo, Monster will also need to continue its more diverse product line in order to capture more consumer dollars. While Monster will likely never take the place of either Coca-Cola or PepsiCo, the company has done a great job of carving out a niche for itself as a producer of products that can provide an energy boost yet with a different twist. In addition to competing in the cola segment, Monster has also positioned itself as an alternative to coffee and other similar caffeinated drinks.

The bottom line

Although Monster Beverage Corp (NASDAQ:MNST) does not pay its shareholders a dividend, its higher-than-average revenue growth as compared with the industry could be one reason alone to invest in this company. Monster’s shares are already up by 4.5% year-to-date in 2013, so it is definitely moving in the right direction. With its positive forward-looking prospects, Monster Beverage Corp (NASDAQ:MNST) could be either a good alternative – or a good companion – for investors’ other beverage-company shares.

The article Will Energy Drink Sales Surpass Traditional Colas? originally appeared on Fool.com and is written by Nauman Aly.

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