Celsius Holdings Inc (CELH) has been one of the top performing stocks over the last 5 years, with its share price increasing an astonishing 4,100% during that time.
On February 8th, 2019, CELH closed at $1.20 per share. Fast forward to today, February 2nd, 2024, and CELH is trading around $53.30. That means a $10,000 investment in CELH back in early 2019 would be worth over $410,000 today.
So what drove this incredible rise and what can investors learn from CELH’s journey? Let’s take a closer look.
Overview of Celsius Holdings
Celsius Holdings is engaged in the development, marketing, sale, and distribution of functional calorie-burning fitness beverages. Its flagship product is Celsius, a fitness drink that is clinically proven to boost metabolism and burn 100 calories per 12 oz can.
The company utilizes a direct-store-door distribution system to get its products into national retailers like Walmart, Target, and Kroger. Celsius is distributed across North America, Europe, Asia, and South America.
Growth Trends
Celsius has experienced tremendous growth in revenue and profits over the past 5 years as it expanded distribution and gained mainstream popularity.
- Revenue has grown from $52.6 million in 2018 to $653.6 million estimated in 2022 – a staggering 1,142% increase.
- Gross profit has expanded from $21.1 million to $270.9 million over the same period.
- The company turned profitable in 2020 and has increased net income from $9.97 million in 2019 to $117.7 million estimated for 2022.
Several factors have driven Celsius’ rapid growth:
- Increasing health and fitness focus: Consumers are becoming more interested in functional beverages that offer health benefits like metabolism boosting. Celsius taps into this trend.
- New distribution channels: Celsius has rapidly expanded from niche channels like gyms to mainstream retailers, giving it a larger addressable market.
- International expansion: Over the last 2 years especially, Celsius has launched in new markets across Europe and Asia.
- Product innovation: Beyond its flagship drink, Celsius has introduced new flavors, sizes, and variations to attract new consumers.
Stock Price Performance
CELH’s stock has charted an impressive trajectory thanks to the company’s ability to consistently beat sales and profit expectations.
Some key stock catalysts include:
- Q4 2018 results: Celsius announced 45% revenue growth in this quarter, sparking the beginning of a bull run for the stock.
- Q2 2020 results: With 111% revenue growth amidst the pandemic, CELH caught Wall Street’s eye and the stock broke out above $10.
- Q1 2021 results: A beat on sales and profits caused the stock to double from $40 to $80 within two months.
- Q3 2022 results: Record revenue growth of 98% YoY powered the stock to new all-time highs around $70.
CELH has been a top momentum stock through this period, as investors reward consistent growth with higher multiples. The price-to-sales ratio expanded from 1x in 2019 to over 6x currently.
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Key Investor Takeaways
CELH provides an instructive case study in identifying and profiting from disruptive consumer stocks early on. Here are some key lessons:
- Focus on companies tapping into seismic consumer shifts like health & wellness. Celsius aligned perfectly with surging fitness drink demand.
- Revenue growth at scale is rewarded. Celsius demonstrated an ability to expand its distribution footprint and customer base while maintaining high growth.
- Look for direct-to-consumer models with expanded retail potential. Celsius moved from niche to mainstream channels, broadening its addressable market.
- International expansion can turbocharge growth. Celsius has only begun tapping markets like Asia-Pacific, presenting a long runway.
- Don’t overweight traditional valuation metrics. High growth stories like Celsius justify elevated multiples.
CELH is a prime example of identifying transformational consumer brands early and having conviction during their rise. The stock’s future returns likely won’t match its 5000%+ 5-year gain, but steady execution could lead to further upside.