Is CELH Stock Still A Buy After Its 30% Rally?

Published: Friday, May 9, 2025 at 10:00 am

Celsius Stock: Is the Energy Drink Maker Still a Buy After a 30% Rally?

Celsius Holdings (CELH), the maker of functional energy drinks, has seen its stock surge over 30% year-to-date, significantly outpacing the broader market. This performance has sparked investor interest, prompting a closer look at the company's potential.

The article highlights Celsius's impressive growth, with revenue increasing over 70% annually in the past three years. This contrasts with Coca-Cola's (KO) more modest 7% growth. Celsius also boasts stronger operating cash flow margins (19%+) compared to Coca-Cola (14%), and a healthier balance sheet with lower debt and higher liquidity.

However, the article also cautions investors about the risks. Celsius stock has historically been volatile, experiencing significant drops during market downturns, such as the 2020 pandemic and the 2022 inflation crisis. The article points out that the stock is trading at 6 times sales, a valuation that could be considered high.

A key factor in Celsius's growth is its strategic partnership with PepsiCo, which includes a $550 million investment and a global distribution agreement. This collaboration has expanded Celsius's market presence and is crucial to its growth strategy.

Despite the positive outlook, the article acknowledges potential risks. These include the possibility of slower growth, increased competition in the functional energy drink market, and potential impacts from commodity price fluctuations or regulatory scrutiny. Investors are advised to consider these factors and be prepared for potential share price volatility.

For long-term investors with a 3-5 year outlook and a tolerance for risk, CELH could be an attractive investment, especially given its current price-to-trailing-revenue multiple of 6x, which is below its three-year average. The average analyst price target of $43 suggests a potential upside of approximately 20%. Alternative investment strategies, such as the Trefis High Quality portfolio, are also suggested for investors seeking to mitigate risk.

BNN's Perspective: While Celsius's growth story is compelling, its historical volatility and high valuation warrant caution. The PepsiCo partnership is a significant advantage, but investors should carefully weigh the risks and consider diversifying their portfolios to manage potential downside.

Keywords: Celsius stock, CELH, energy drink, stock analysis, investment, PepsiCo, functional energy drinks, market growth, Coca-Cola, KO, stock rally, financial performance, revenue growth, profitability, volatility, risk, long-term investment, Trefis High Quality portfolio, market crash, stock market, investment strategy.

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