Skip to main content

The Globe and Mail

Monster Beverage gets perfect score using Buffett model portfolio

Steve White/The Canadian Press Images

Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.

California-based Monster Beverage Corp. makes energy drinks and alternative beverages under such names as Monster Energy, Java Monster, X-Presso Monster, M-3, Worx Energy and Hansen's natural sodas and juices. It has a market cap of $12-billion (U.S.).

Monster Beverage gets a 100-per-cent score from the Warren Buffett-based model, thanks in part to having upped earnings per share in all but one year of the past decade.

Story continues below advertisement

It has averaged a 34-per-cent return on equity over the past decade, another reason the Buffett model likes it.

The company has grown earnings at a 21-per-cent pace over the long term, more than doubling the non-alcoholic beverage industry average (using an average of the 3-, 4-, and 5-year EPS growth rates), which the Martin Zweig-based model likes.

Earnings growth has been driven by revenue growth (18 per cent, using an average of the 3-, 4-, and 5-year sales growth rates), not one-time unsustainable factors, another reason the Zweig model has some interest.

Monster Beverage has a solid 77 12-month relative strength, even though the non-alcoholic beverages industry average is just 44.

The company has no long term debt, which both the Zweig and Buffett models like. It has strong 15-per-cent profit margins, and it has a strong 3.7 current ratio which the Ben Graham-inspired model likes.

John Reese is long MNST.

Click here for a complete breakdown of Validea's investing guru report.

Story continues below advertisement

Read other research reports here.

Report an error
Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨