Q: You guys at 5 i used to be high on a buy for Celsius Holdings. It bounces up and down 2 to 3 per cent almost daily but the overall trend as been lower highs and lower lows. I don't want to liquidate my position because of the international growth opportunities for Celsius and the possible normalization of inventory levels of their "healthy" energy drinks with their distributor who is Pepsi. But the trend is not my friend for celsius. I have traded it a couple of times to bring down my acb but even that is making me nervous. I don't have much exposure to consumer staple nor consumer discretionary (I assume Celsius is considered to be discretionary?) so if I cut losses with celsius, what should I consider as a replacement?
5i Research Answer:
CELH now trades at 28X forward earnings with revenues expected to grow 15% this coming year and EPS to grow at 35%. Sentiment and momentum has not been great to say the least but the long-term growth opportunity remains and they continue to outperform peers in the sector, which is seeing a slowdown across the board. CELH is technically staples, but for a replacement with growth in the discretionary space, ATZ might be worth considering.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in CELH.