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Celsius Holdings Is On Track for Its Worst Year in Over a Decade. Is This a Huge Buying Opportunity for Investors?
Celsius Holdings (NASDAQ: CELH) has been a terrific growth stock to own over the past decade as both its top and bottom lines have soared. But this year has been a nightmare for shareholders of the energy drink company. Its growth rate has slowed, and with a concerning outlook ahead, the stock has been in a free fall.
Year to date, shares of Celsius are now down more than 35%. The stock could be headed for its worst year since 2011. Is Celsius in deep trouble, or could this be a great time to invest in the energy drink company?
Celsius stock has normally been a solid investment
Celsius has been one of the best growth stocks to own over the past decade, as it has generated mammoth, life-changing returns for its investors. Here’s a breakdown of its annual returns by year.
|
Year |
Celsius Stock Return |
|---|---|
|
2023 |
57.2% |
|
2022 |
39.5% |
|
2021 |
48.2% |
|
2020 |
941.6% |
|
2019 |
39.2% |
|
2018 |
-33.9% |
|
2017 |
114.3% |
|
2016 |
26.3% |
|
2015 |
288% |
|
2014 |
47.1% |
|
2013 |
68.7% |
|
2012 |
-4% |
|
2011 |
-50% |
Data source: YCharts.
Besides an “off” year in 2018, the stock has fairly consistently generated solid annual returns of at least 20% per year for the past decade. That includes one exceptional year in 2020, when it shot up more than 900%. The problem is that when a stock rallies so much, expectations become inflated, making it difficult for the stock to remain a hot buy with growth investors.
Why is Celsius stock struggling so badly this year?
Celsius’ business has achieved some incredible growth over the years as it has established itself as one of the top energy drink companies in North America. But its sales growth rate has been slowing down this year. The company’s key distribution partner, PepsiCo, has also decided to reduce its inventory of Celsius products. That’s a concerning sign that the growth rate may slow even further in the coming quarters, and that the overall outlook may not be that encouraging, either.
Investors have become accustomed to paying high multiples for Celsius stock in the past, but as its growth prospects have become more concerning, there’s less of an appetite to do so. Today, the stock trades at over five times its trailing revenue. That’s a big adjustment compared with how highly investors were valuing the stock previously.
Through the first half of this year, Celsius has reported revenue totaling $757.7 million, which is up 29% year over year. That’s not a bad growth rate by any stretch, but in the past it wasn’t uncommon for the company to be doubling its top line. With Celsius perhaps no longer looking like a growth machine, investors have adjusted the premium they’re willing to pay for the business.
Is Celsius stock a good contrarian buy today?
Celsius has become profitable of late, and based on analyst expectations of future earnings, it’s trading at approximately 32 times next year’s profits. That doesn’t strike me as an unreasonable multiple for a business that’s still growing at a rate of around 30%. And with Celsius in the early stages of its international expansion plans, the business is by no means running out of growth opportunities just yet.
Provided that you’re willing to be patient with the company, Celsius stock could make for a great buy right now, as it still has a lot of room to grow over the long haul.
Should you invest $1,000 in Celsius right now?
Before you buy stock in Celsius, consider this:
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Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $831,707!*
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Celsius. The Motley Fool has a disclosure policy.
Celsius Holdings Is On Track for Its Worst Year in Over a Decade. Is This a Huge Buying Opportunity for Investors? was originally published by The Motley Fool
Sales of existing homes fell in September as house hunters remained on the fence about buying a home despite mortgage rates easing during the month.
Existing home sales slipped 1.0% from August’s tally to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors said Wednesday. That marked the lowest rate since October 2010. Economists polled by Bloomberg expected a pace of 3.88 million in September.
On a yearly basis, sales of previously owned homes were 3.5% lower in September. The median home price rose 3.0% from last September to $404,500, marking the 15th consecutive month of annual price increases.
“Home sales have been essentially stuck at around a 4 million-unit pace for the past 12 months,” NAR chief economist Lawrence Yun said in a press release.
There have been significant challenges that have weighed on sales activity, including a lack of inventory, escalating prices, and elevated mortgage rates. Last month, however, those factors turned around.
The Federal Reserve cut its benchmark rate by half a percentage point in September. While the central bank doesn’t set mortgage rates, its actions influence their direction of movement.
Mortgage rates hit the lowest level since February 2023 ahead of the Fed decision to ease, while listing inventory picked up.
But overall, that hasn’t been enough to entice buyers.
“Some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election,” Yun said.
Tesla (TSLA) reported mixed third quarter results after the bell on Wednesday, but the stock jumped in after-hours trading as investors cheered the earnings beat, higher gross margins, and news that Tesla’s cheaper EV is on track for production next year.
For the quarter, Tesla reported revenue of $25.18 billion vs. $25.4 billion per Bloomberg consensus, higher than the $25.05 billion it reported in Q2 and also topping the $23.40 billion Tesla reported a year ago. Tesla posted adjusted EPS of $0.72 vs $0.60 expected, on adjusted net income of $2.5 billion and free cash flow of $2.9 billion.
The closely watched gross margin figure came in at 19.8%, much higher than the 16.8% expected.
Tesla shares were up nearly 8% in after hours trade.
“We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes,” the company said in its earnings deck. “Preparations remain underway for our offering of new vehicles — including more affordable models — which we will begin launching in the first half of 2025.”
Earlier this month, Tesla (TSLA) announced third quarter deliveries that slightly missed expectations, sending the stock lower.
Tesla said it delivered 462,890 vehicles in Q3, up 6.4% quarter over quarter, to mark the first quarter of delivery growth this year. The numbers also came in ahead of the 435,059 EVs the company delivered in the year-ago period. But Wall Street had expected Tesla to deliver closer to 463,897, according to Bloomberg.
“Refreshed Model 3 ramp continued successfully in Q3 with higher total production and lower cost of goods sold quarter-over-quarter. Cybertruck production increased sequentially and achieved a positive gross margin for the first time,” Tesla said in its report.
Tesla said it expects vehicle deliveries to achieve “slight growth” in 2024.
Ahead of Tesla’s Q3 disclosure, shares were down approximately 11% since Tesla revealed its robotaxi, dubbed the Cybercab, at its showy “We, Robot” event from the Warner Bros. studio lot in Burbank, Calif., on Oct. 10.
The debut and release of a cheaper EV is what many analysts and industry watchers believe will spur the next leg higher of EV sales, as even CEO Elon Musk has said before. During its Q2 report, Tesla and Musk said the company remains on track for the production of new vehicles, likely including a cheaper EV, in the first half of next year.
Investors and analysts were left wanting more details from Tesla’s “We, Robot” event on the Cybercab itself and detailed testing plans, along with questions about the development of Tesla’s sub-$30,000 EV, dubbed the Model 2.
Transak disclosed a data breach affecting over 92,000 users after a phishing attack compromised an employee’s laptop.
CryptoCurrency
The Dow plummets more than 600 points and is on track for its worst day in more than a month
The Dow Jones Industrial Average and other major indexes suffered a steep decline Wednesday afternoon as the yield on the benchmark 10-year U.S. Treasury note continued its upward climb, reaching 4.23%—a level not seen since July.
In the afternoon, the Dow dropped 631 points, or 1.4%, heading for its worst day in over a month. Meanwhile, the tech-heavy Nasdaq and the S&P 500 declined by 2.2% and 1.4%, respectively. However, there was some relief for investors as oil prices eased, with West Texas Intermediate (WTI) futures trading around $70.65 per barrel.
The Federal Reserve’s Beige Book, released in the afternoon, reported that economic activity remained largely unchanged across the 12 Federal Reserve Districts, with the Southeast significantly impacted by a harsh storm season.
On Wednesday, all eyes are on Tesla (TSLA) as the company prepares to release its latest earnings report. Analysts expect earnings per share to be 60 cents, down from 66 cents a year ago but an improvement from 52 cents in the previous quarter, according to FactSet estimates. Revenue is projected to hit $25.4 billion, compared to $23.3 billion in the third quarter of 2023 and $25.5 billion in the preceding quarter.
Apart from Tesla, investors are closely monitoring earnings reports from other major corporations, including AT&T (T), Boeing (BA), and Coca-Cola (KO).
McDonald’s stock plunges over 5%
McDonald’s (MCD) shares took a sharp hit, falling over 5% after the Centers for Disease Control and Prevention (CDC) linked the chain’s Quarter Pounder burgers to an E. coli outbreak. The outbreak has led to 10 hospitalizations and one death, driving a significant decline in McDonald’s stock during the afternoon trading session.
As of now, 49 cases have been reported across 10 states between Sept. 27 and Oct. 11, with a majority of illnesses occurring in Colorado, Nebraska, Utah, and Wyoming. The CDC noted that most of those affected had eaten a Quarter Pounder. Investigators are working swiftly to identify the contaminated ingredient.
Spirit Airlines stock soars 30%
After a failed attempt at merging with JetBlue (JBLU-0.80%), ultra-low-cost carrier Spirit Airlines (SAVE+28.01%) is reportedly turning back to a familiar partner. The Wall Street Journal (NWSA-0.34%), citing people familiar with the matter, reports that Spirit and Frontier Airlines (ULCC+3.05%) are in early talks over a potential merger. The news sent Spirit’s stock soaring nearly 30% on Wednesday.
–Francisco Velasquez and Rocio Fabbro contributed to the article
The semi-autonomous region of Tanzania is taking advantage of a sandbox regulatory framework adopted in July.
Bitcoin’s correction ignited selling in altcoins, which are slipping below critical support levels.
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