UBS’ Bottom Quant Stocks In AI, IT, Healthcare & Others: 29 Stocks In All Sectors

11. Monster Beverage Corporation (NASDAQ:MNST)

Number of Hedge Fund Investors In Q2 2024: 37

Sector: Consumer Staples

Monster Beverage Corporation (NASDAQ:MNST) is one of the biggest carbonated beverage companies in the US. The firm is known for its popular Monster energy drink, and it also has other products in its portfolio such as alcoholic beverages and water. While a diversified product portfolio is beneficial to most firms in most cases, for Monster Beverage Corporation (NASDAQ:MNST) it also carries the risk of lower revenues in a tight consumer environment. This was also the case during Q3 when the firm’s $1.88 billion revenue missed analyst estimates of $1.91 billion as consumers cut down spending on pricier beverages. Monster Beverage Corporation (NASDAQ:MNST)’s decision to increase its prices for the first time in 2024 in two years came at the wrong time as well. However, the firm enjoys a sizable position in the US market courtesy of its 24% share of the energy drink market which positions it well for a recovery in consumer spending.

Monster Beverage Corporation (NASDAQ:MNST)’s management commented on the sluggish demand during the Q3 2024 earnings call:

“The energy drink category in the United States and in certain other countries experienced lower growth rates in the second quarter. Retailers have reported a reduction in convenience store foot traffic and we have seen a shift in retail towards more mass and dollar channels. Other beverage and consumer packaged product companies have also seen a tighter consumer spending environment and weaker demand in the quarter. The energy category globally continues to grow and has demonstrated resilience as we believe that consumers view energy drinks as an affordable luxury. We believe that household penetration continues to increase in the energy drink category. Growth opportunities in household penetration per capita consumption, along with consumers’ need for energy or positive factors for the category.”