With the fiscal cliff discussions in the rear view mirror and the S&P 500 continuing to march higher and nearing 52-week highs, the bulls are winning the battle. The following two beverage stocks, both growth-types, should stand to benefit as the markets continue gaining steam.
SodaStream (SODA) has been a top performer over the past two months as the buzz continues to grow for the company on the base of strong earnings growth. The growth is expected to continue in 2013 as well, making SodaStream an interesting portfolio candidate in the first full week of the new year.
SodaStream manufactures beverage carbonation systems, which enable consumers to easily transform ordinary tap water instantly into carbonated soft drinks and sparkling water. Soda makers offer a highly differentiated and innovative solution to consumers of bottled and canned carbonated soft drinks and sparkling water.
Analysts project the company to report revenue growth of nearly 50% for 2012 while reporting revenues of $424 million. Revenues for 2013 are expected to jump to $501 million on growth of 18%. These figures seem to be justified by the fact that the company just debuted its newest soda maker, the continued company expansion internationally, and the addition of new flavors with new partnerships. In October, SodaStream announced that its products are being made available in Russia, Chile and Singapore through new exclusive partnerships. In mid-November, SodaStream and Campbell Soup (CPB) announced an agreement to license Campbell's V8 Splash and V8 V-Fusion brands for the SodaStream home beverage carbonation system.
On the smaller side, Pulse Beverage is another company in the space that seems to be following the footsteps of SodaStream and expanding its global presence as well as introducing new flavors of its products. In October, Pulse announced that it added "Blueberry Lemonade" as a sixth flavor to its Cabana 100% Natural Lemonade line-up of great tasting, all-natural, "good-for-you" premium lemonades. In November, the company announced that Pulse brands will make their retail debut in Mexico in the first quarter of 2013 with the introduction of Cabana 100% Natural Lemonade.
Monster Beverage (MNST) is a marketer and distributor of energy drinks and alternative beverages. The stock has been stagnant as of late as it has been bogged down by regulatory issues. Initially, on October 22, the NY Times reported that five people may have died over the past three years after drinking Monster Energy, a popular energy drink that is high in caffeine, according to incident reports released by the FDA. The stock dropped 14% in response to the news. Then the next day, the stock fell again after analysts were cautious on the stock following the report.
However, now the regulatory issues seem like a thing of the past. On November 27, the FDA suggested that it isn't planning any immediate actions. The FDA said there is "a long history of safe use'' of products containing caffeine and that it is unaware of any scientific studies questioning the combined safety of ingredients in energy drinks. In response to the news, the stock rose 13%. Following that, in December Stifel Nicolaus upgraded the stock and said that it sees sales growth re-accelerating in 2Q13 and that the regulatory risk is overstated.
Despite the struggling stock and regulatory disruptions, demand for Monster's products is expected to continue at a healthy clip. Analysts expect the company to continue putting up solid growth numbers with revenue growth of 22% for FY12 followed with a 15% figure for FY13. EPS is expected to jump to $1.89 in FY12 with the company posting a mark of $2.33 in FY13. If for some reason Monster experiences more hiccups with the FDA, Coca-Cola (KO) has long been interested in buying Monster which should provide some support for the stock.