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Celsius: Buy The Pullback

Bill Maurer profile picture
Bill Maurer


  • Celsius Holdings has shown tremendous revenue growth, with vastly improved gross margins and soaring earnings per share.
  • Analysts have been raising their revenue estimates considerably due to the company's revenue beats and expanded distribution capabilities after partnering with Pepsi.
  • Celsius has a healthy balance sheet with over $680 million in cash, and its strong growth potential could result in shares hitting new highs next year.
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Over the past couple of years, one of the best performing names in the market has been Celsius Holdings (NASDAQ:CELH). The energy drink company has showed tremendous revenue growth quarter after quarter, with the latest leg up being helped significantly

This article was written by

Bill Maurer profile picture
I am a market enthusiast and part-time trader. I started writing for Seeking Alpha in 2011, and it has been a tremendous opportunity and learning experience. I have been interested in the markets since elementary school, and hope to pursue a career in the investment management industry. I have been active in the markets for several years, and am primarily focused on long/short equities. I hold a Bachelor of Science Degree from Lehigh University, where I double majored in Finance and Accounting, with a minor in History. My major track focused on Investments and Financial Analysis. While at Lehigh, I was the Head Portfolio Manager of the Investment Management Group, a student group that manages three portfolios, one long/short and two long only. I have had two internships, one a summer internship at a large bank, and another helping to manage the Lehigh University Endowment for nearly a year. Disclaimer: Bill reminds investors to always do their own due diligence on any investment, and to consult their own financial adviser or representative when necessary. Any material provided is intended as general information only, and should not be considered or relied upon as a formal investment recommendation.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Investors are always reminded that before making any investment, you should do your own proper due diligence on any name directly or indirectly mentioned in this article. Investors should also consider seeking advice from a broker or financial adviser before making any investment decisions. Any material in this article should be considered general information, and not relied on as a formal investment recommendation.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (36)

PauloCostaSilva profile picture
Initiated a position yesterday. Was divided between $MNST and $CELH but went for the latter.
Sub 150 would be better but $158 is great considering it was $206 1 month ago.
The young generation are hooked on this. When they grow up and have buying power they'll just continue buying what they love : enter Celsius Holdings.
This stock has a generational wealth-building potential. Long
I added pretty big today at 152. Close enough to the 200EMA for me.
$CELH is my largest position. While large drawdowns suck, it comes with the territory if you have an investment goal of compounding returns over time. As others have pointed out, $CELH has yet to scratch the surface on international sales, their runway is long. At home they are expanding the energy drink category and I believe we will witness them taking share from $MNST. Since $CELH is already such a large position in my portfolio, I do not intend to add at these levels, but at lower prices I will be compelled.
I studied the $MNST $KO partnership over the past 9 years. If you purchased $MNST after the partnership announcement, MNST has approximately doubled on every double in revenue.
When the $PEP CELH partnership was announced, CELH was around at $500 Million revenue rate (MNST was already around $2B revenue when $KO partnered). Today CELH is at a $1.2B run rate. My guess is CELH would double revenue again over 2-3 years and I would expect the shares to follow.
During a market correction, all financial assets typically correlate. Once the panic abates, investors will look to the companies with pricing power and growth despite a recessionary environment. I believe CELH will be one of the first to recover along with the market, but I also have no idea when the bottom may come. I'm giving the market a wide berth, figuring we should see a spike in panic (and a tradable bottom) between now and Halloween.
SuperPac profile picture
Nice note. Thx. Do you think $CELH has the mettle to survive over the long haul, and is not a passing fad of a few years?
@SuperPac there is really no way to know is the simple answer. But bottom line, the dominant consumer companies are marketers extraordinaire. $NKE sells $5 sneakers for $200. $KO & $PEP sell sugar (or chemical) water that costs $.50 for $2 a can. I think PEP has a good horse in this race. I would posit that PEP watched the success of KO and MNST's partnership and wanted to plug that hole in their portfolio. It took them 8 years and they found one in CELH. My observation is that CELH appeals to a larger market segment than Monster or Red Bull. I and my wife never drank either, but we stock a case or so of CELH in our house. We will have to remain patient and see if PEP can continue to grow CELH internationally. Of course we will need to monitor price and unit trends within the industry, but at some point I have to believe there will be some uncertainty and worry about your question.
SuperPac profile picture
The drop in the $CELH stock price has been rather dramatic, down 18% in a few days time. From $206 to $168. Could the downward momentum have a distance to go? The price-to-sales based on 2023 full year estimate is still about 10X. This is the same as what the market gives an AAA rated tech stock like $MSFT. Does that make sense?
@SuperPac I’m thinking MNST is a better comparison than MSFT?
etrade2000 profile picture
@SuperPac CELH is dropping just like the overall market. If the 10 year treasury go up to 5% (which I think it will) all stock will keep dropping. I'm at 47% cash.

If it pulls back to its 200 day moving average, that's around $120s.
@SuperPac never try to make sense about how the market values companies. Remember that the market is all the participants deciding what something is worth by placing their buy or sell orders. Between 2000-2015 MSFT did not make an all time high. It was still a wonderful business, but its valuation peaked in 1999 and it took a decade and a half to grow back into its valuation.

As another commenter suggests, MNST is probably a better comp. Soft drink companies are valued uniquely, the leaders are recession resistant and can take price during inflationary periods which expands profit margins. How many companies have those characteristics?
I added a lot during this drop at 174 and 170. This stock has so much runway. Didn’t think I would be blessed to have another opportunity to buy at this price but here it is. Had to take it. Long
I agree. Celsius gets over 90 percent of its revenue domestically. There’s a big runway for international growth in the near term.
@SilverBandit Read last Qtrs call transcript closely. Very specific language re: US is near term focus, therefore limited international expansion near term w/ significant opportunity in 3-5 yrs.
@atwood.todd so you should hold this stock for long term.
@atwood.todd still have a huge runway
skywola profile picture
It's not unusual to see stocks that are well-rated that drop by large percentages to also gain by large percentages once the market turns around. That said, CELH could still drop substantially more if the market itself drops more, that's the real unknown in this equation. Long term, this stock is likely to do well. Option trades I am making currently are at least four months out.

Care to share the trades you are looking at, and whether long or short the options?
skywola profile picture
@JackCr I get the stocks or ETF's I trade via Alpha Picks, which you can subscribe to for about $90 and it is well worth it, and my YUP list, (Yearly Uptrenders list) which I track stocks that have been uptrending over a year's time. The main reasoning behind that is that if you buy in to a stock that has a history of uptrending over a years time, and it goes down, chances are pretty good that it will recover in time, as long as it continues its historical trend.

That said, I use both sources to get my leads, and I look at the ratings on them and technical analysis on them to choose from amoungst them. (Obviously historic performance does not guarantee future performance.)

You can find a lot of the ones I have in my YUP list by looking in TOP STOCKS, then sorting by QUANT rating, PERFORMANCE, and visually inspect the yearly chart. I also use technical analysis and thepatternsite.com/... to look over potential stocks and ETFs. Add to all that www.youtube.com/... For a very well-rounded process for selecting stocks to trade.

I do not trade PUTS much, only for things like what I call a Vulture play, and other relatively unique situations, but that is for another time.
Thanks for the thoughtful article. CELH has been my biggest gainer outside of an over decade APPL holding. It was nearly a 5 bagger at $205 but I was fairly overweight in it per my portfolio balance (became over 20% of my holdings). I shaved a dozen shares around $202 but said if it fell into the 160s, I would probably just add again. Looks like I may have to put my money where my mouth is.
Thanks for the timely analysis. Am a shareholder and a consumer. Strong advocate of the company and the product (try it!). Most recent Nielsen data confirms that 100%+ YOY growth continues, w/ consumer marketing support in early stages. For those looking to establish/increase a position, this may well be a window. Would certainly consider pulling trigger well prior to the 11/9 earnings.

Todd Atwood

PS: I would manage near term expectations re: international. In their words 2024 is a handful of countries to create a blueprint, further expansion in 2025/26, with a significant opportunity via Pepsi in 3 to 5 yrs. They strongly emphasize US is the near term focus.
@atwood.todd yep. still accelerating yet stock crashing, so the stockmarket is bad is the only conclusion.
@halba12 Hedge funds short. Give it time to work through. Patience is a virtue. This is a winner of a stock long term.
@dl4 its quite possible itll be atleast 50% of MNST market cap long run, especially with the launch of new product lines.
But Bill you have no position?
Bill Maurer profile picture
@Will Teasle

I don't own/trade what I'm writing about, long or short.
Bill Maurer profile picture

Allows me to be more objective.
First comment, going lower cause the run just went to fast. Fear is setting into the markets.
Patrick5500 profile picture
@dl4 it’s September….
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