We recently published a list of the 10 Best of Breed Stocks to Buy For The Third Quarter of 2024 According to Bank of America. Since Monster Beverage Corp (NASDAQ:MNST) ranks 9th on the list, it deserves a deeper look.
Analysts at BofA Securities recently published a list of “best of breed” stocks for the third quarter of 2024, which they believe are the top choices for investors on the back of their high quality, liquidity, earnings growth and margin upside when compared with peers. BofA’s “best of breed” basket of stocks has reportedly outperformed the MSCI All Country World Index (NASDAQ:ACWI) by 584 basis points, and returned a whopping 470% since its inception in April 2010.
Bank of America analyst Michael Hartnett thinks these best of breed companies have strong balance sheets, cash flow and high EPS growth as well as competent management. Hartnett believes these companies generate the “best relative returns” in the long term and can protect investors against short-term volatility.
For this article we scanned BofA’s best of breed basket of stocks and picked 10 companies with the highest number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A woman pouring a freshly made beverage from a large-scale bottling line.
Monster Beverage Corp (NASDAQ:MNST)
Number of Hedge Fund Investors: 43
BofA added MNST in its list of best of breed stocks. Monster Beverage Corp (NASDAQ:MNST) is one of the biggest names in the energy drinks market, which is expected to grow at a CAGR of 8.4% through 2030 in North America while growth in emerging markets like Asia would be even stronger. Monster Beverage Corp (NASDAQ:MNST) has a big advantage in distribution over competitors thanks to its deal with Coca Cola. While strong competition from Celsius has been a concern among investors, Monster is in a much strong position to offset any risks via acquisitions and aggressive marketing and product launches. Monster Beverage Corp (NASDAQ:MNST) market cap is $52 billion, while Celsius market cap is just $13 billion. Analysts believe Monster Beverage Corp (NASDAQ:MNST) is operating in the non-cyclical energy drinks industry and its per-can price isn’t a burden on the customer’s pocket despite inflation. During the first quarter, Monster Beverage Corp (NASDAQ:MNST) margins came in at a healthy 23%, while its international business grew 19.5% and accounted for about 39.2% of total sales.
Monster Beverage Corp (NASDAQ:MNST) current P/S ratio of 6.57 is 20% below its five-year average while its forward P/E of 27.82 is 19.5% below its five-year average. Over the next five years, Wall Street expects Monster Beverage Corp (NASDAQ:MNST) to see earnings growth of 14% on a per-annum basis. Amid growth of international sales and expansion into new areas Monster Beverage Corp (NASDAQ:MNST) stock seems to have more upside. Average analyst estimate set by Wall Street on the stock is $61, which presents a 22% upside potential from the current levels.
Overall, Monster Beverage Corp (NASDAQ:MNST) ranks 9th on Insider Monkey’s list titled 10 Best of Breed Stocks to Buy For The Third Quarter of 2024 According to Bank of America. While we acknowledge the potential of Monster Beverage Corp (NASDAQ:MNST), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Monster Beverage Corp (NASDAQ:MNST) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
