Apple (NASDAQ: AAPL) has minted a lot of millionaires since its initial public offering (IPO). The tech giant went public at a split-adjusted price of $0.10 in 1980, and it now trades at about $228 — so a $10,000 investment back then would be worth about $22.8 million today. That’s a life-changing gain, but Apple probably won’t replicate those millionaire-making moves over the next few decades.
Apple is already the world’s most valuable company, with a market cap of $3.47 trillion, and its core growth engines are cooling off. It still depends on the aging iPhone for more than half of its revenue, its Mac and iPad product lines are also aging, and its higher-growth services business faces antitrust headwinds in the U.S. and Europe.
Image source: Getty Images.
Apple is still a safe long-term investment, but investors looking for bigger gains should check out smaller companies that have churned out millionaire-making gains. One of those companies is the energy drink maker Celsius (NASDAQ: CELH), which saw its stock soar a whopping 18,680% over the past 10 years and would have turned a $10,000 investment into nearly $1.9 million. That same investment in Apple would have grown to about $90,000 over the past decade.
Yet Celsius only has a market cap of $8 billion. That makes it much smaller than its competitor Monster Beverage (NASDAQ: MNST), which is worth $50 billion. So could Celsius generate even more millionaire-maker gains in the future?
An incredible turnaround story
Celsius was founded in 2004 and went public in 2006. It tried to carve out a niche with sugar-free energy drinks that used all-natural ingredients like green tea, ginger, and various amino acids. It also claimed its drinks had “thermogenic” properties that help people burn more calories during workouts.
After its public debut, Celsius rapidly expanded its capital-intensive direct-to-retail (DTR) and direct-store-delivery (DSD) distribution networks to lock in more retailers. It also launched costly marketing campaigns to promote its drinks.
Unfortunately, those costly tactics didn’t boost its sales fast enough to offset its widening losses. By 2010, it was aggressively cutting costs to stay afloat. It was delisted from the Nasdaq Stock Market that year and became an over-the-counter stock.
That delisting was a wake-up call for Celsius. It rebooted its business by replacing its entire board and C-suite, rebranding and repackaging its drinks, cutting loose unprofitable accounts like Costco Wholesale to boost its gross margin, and targeting health-oriented businesses like gyms and health supplement shops instead of supermarkets and superstores. When it finally returned to grocery stores, it shrewdly placed its drinks in the health and beauty aisles instead of the beverage section.
That turnaround led to Celsius’ return to the Nasdaq in 2017. John Fieldly, who served as Celsius’ CFO from 2012 to 2017, became its permanent CEO in 2018. Under Fieldly, Celsius maintained its momentum, attracted more health-oriented consumers, and became the third-largest energy drink in America after Red Bull and Monster Beverage.
How fast is Celsius growing?
From 2013 to 2023, Celsius’ revenue grew at a compound annual growth rate (CAGR) of 61% from $11 million to $1.32 billion. Its gross margin expanded from 38% to 52%.
|
Metric |
2020 |
2021 |
2022 |
2023 |
1H 2024 |
|---|---|---|---|---|---|
|
Revenue growth |
74% |
140% |
108% |
102% |
29% |
|
Gross margin |
46.6% |
40.8% |
41.4% |
48% |
51.6% |
|
Adjusted EBITDA margin |
12.2% |
10.7% |
10.9% |
22.4% |
24.9% |
Data source: Celsius Holdings.
Over the past four and a half years, Celsius’ revenue continued rising as its gross and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins expanded. Its new domestic distribution deal with PepsiCo, which started in August 2022, significantly boosted its sales in 2022 and 2023.
That growth was amplified by its rising sales on Amazon and the expansion of its smaller international division. At the beginning of this year, Celsius signed a new distribution deal with the Japanese beverage giant Suntory to sell its drinks in the U.K., Ireland, and Canada. PepsiCo, which acquired 8.5% of Celsius for $550 million two years ago, could also eventually expand its domestic distribution deal into more overseas markets.
However, Celsius’ growth cooled off in the first half of 2024 as it lapped the ramp-up period of its distribution deal with PepsiCo. It also struggled with some minor market share losses in the increasingly crowded U.S. energy drink market.
Could Celsius still generate millionaire-making gains?
But from 2023 to 2026, analysts still expect Celsius’ revenue to grow at a CAGR of 16% as Monster’s revenue only rises at a CAGR of 8%. They expect Celsius’ adjusted EBITDA to increase at a CAGR of 19% during those three years.
Those growth rates are stable, and Celsius’ stock looks reasonably valued at 4 times next year’s sales and 18 times its adjusted EBITDA. But its business is gradually maturing, so it probably couldn’t churn a fresh $10,000 investment into more than $1 million again over the next decade. That said, Celsius is still a solid growth stock that has a clear shot at outperforming its industry peers, the broader market, and even bigger blue chip stalwarts like Apple over the long term.
Should you invest $1,000 in Celsius right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Leo Sun has positions in Amazon and Apple. The Motley Fool has positions in and recommends Amazon, Apple, Celsius, Costco Wholesale, and Monster Beverage. The Motley Fool has a disclosure policy.
