Friday, October 11, 2024

My Next Potential Gift Gap Play

Trade of the Day Wake-Up Watchlist

"Sales for CELH jumped to $1.3 billion last year."

Bryan Bottarelli, Head Trade Tactician, Monument Traders Alliance

Bryan Bottarelli

I'm not a big energy drink guy.

I have enough natural energy (according to sources close to me).

But I know energy drinks have always been one of the fastest growing companies in the beverage category.

So right I have an energy drink company on my watchlist for a potential trade.

I'm talking about Celsius Holdings (CELH).

Here's the rundown…

Late last month, CELH dropped 12% after management said that orders from a major distributor declined from last year. Compared with their peak in May, shares are down more than 66%.

I believed this is a textbook Wall Street overreaction.

Here's why…

Like I mentioned up top, I've never gotten into energy drinks. I don't need a can full of sugar to prop me up. As a result, I've never bought a can of Monster or Red Bull in my life (which have a combined market share of 70%).

However, I would consider CELH, simply because they're a healthier alternative to the current market rivals.

Energy drinks have always been one of the fastest growing beverage categories – and Celsius has been grabbing market share by attracting a new niche sector that's more focused on health benefits.

Sales for CELH jumped to $1.3 billion last year from $130 million in 2020, and they now make up about 10% of the U.S. energy drink market. A distributor deal with PepsiCo helped Celsius to gain access to most of the major retailers and restaurants.

Its products use natural ingredients like ginger root and green tea extract – which helps boost metabolism and burn body fat. This appeals to the growing number of Americans pursuing healthier, more active lifestyles.

Celsius makes its move

Yesterday, shares of CELH were up 5% after a Piper Sandler teen survey showed that Celsius is outperforming energy drinks. Specifically, the investment firm noted that the brand's share of mentions as a favorite is about 35% more than its overall market share.

 

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Trump in Oval Office
Source: Wikimedia Commons

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Action Plan: I've been expecting this pop on CELH for a while, and I believe this is just the beginning. I'll be looking at a potential play in The War Room to take advantage of Wall Street's latest overreaction.

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Trump in office
Source: Wikimedia Commons

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