Two of the most successful companies in U.S. history are centered around beverage products. Of course, I’m talking about Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP). The two firms’ sodas have become well-known and popular in much of the world, with KO, in particular, becoming quite ubiquitous globally. As a result of these trends, the market capitalizations of Coca-Cola and Pepsi are a huge $257 billion and $240 billion, respectively. But other U.S. beverage firms have also been successful. For example, the market capitalizations of Keurig Dr. Pepper (NASDAQ:KDP) and Monster Beverage (NASDAQ:MNST) are now $44 billion and $59 billion, respectively.
While we may not see another Coca-Cola or PepsiCo in our lifetimes, the beverage sector is very lucrative for some companies. Here are three beverage stocks that can grow explosively over the long term. And who knows? Maybe one of these firms could catch fire and become the next Coke or Pepsi.
Monster Beverage (MNST)
Grocery store shelf with 16 ounce cans of Monster brand energy drinks.
Source: Sheila Fitzgerald / Shutterstock.com
Monster is a leader in the U.S. energy-drink category and that category is rapidly growing. According to Statista, the revenue generated by energy drinks in America jumped 13.7% in 2022 and 12.9% in 2023.
As a result, it’s not surprising that Monster’s top and bottom lines are also rapidly increasing. In Q3 of last year, for example, its revenue jumped 16% versus the same period a year earlier, while its net income surged 40% year-over-year (YoY) to $453 million.
Also encouraging is that the revenue generated by Monster’s emerging alcoholic beverages jumped 58% YoY to $42.3 million.
Meanwhile, the Street is quite upbeat on MNST. In December, Morgan Stanley (NYSE:MS) identified MNST as one of 37 high-growth stocks with low volume. In January, it identified the name as a high-quality growth stock.
And last month, Goldman (NYSE:GS) identified MNST as one of the top beneficiaries of strong return-on-equity growth.
Celsius Holdings (CELH)
three energy drinks contrasted against a white background
Source: Shutterstock
The popularity of Celsius’ (NASDAQ:CELH) healthy carbonated energy drink offerings is growing rapidly, and the firm is taking market share in the popular category. Indeed, as I noted in a previous column, CELH’s “revenue soared 105% in the four-week period that ended on December 30,” according to research firm Nielsen.
The firm has already expanded to Canada and intends to start selling its beverages in a wide variety of countries over the longer term. Of course, Celsius’ overseas expansion should cause its growth to accelerate to even more impressive levels.
Celsius’ sales doubled in the first three quarters of 2024, and the fact that it’s offering healthy, fairly good-tasting (in my view) products in the rapidly growing energy-drink category leaves it well-positioned to be extremely successful down the road.
Investor’s Business Daily gave CELH a fairly high Composite Rating of 83 out of 99.
ZeviaPBC (NYSE:ZVIA) markets its namesake sodas that, as far as I can tell, are the only carbonated beverages available on a wide scale sweetened solely by stevia.
Unlike sugar, stevia has no calories or known, major, negative impact on people’s health. Moreover, the chemicals used to make diet sodas, such as aspartame, have also been identified as potentially having very negative effects on humans. For example, the International Agency for Research on Cancer found that aspartame may cause cancer, and some indications show it could undermine memory.
As someone who drinks both Zevia’s products and diet soda rather frequently, I can attest that, in my view, Zevia’s sodas taste around 20% to 30% better than diet sodas.
Zevia’s top line dropped 2.6% in Q3 versus the same period a year earlier, while it generated a per-share loss of 16 cents.
However, the company’s gross margin of 45% is quite high, indicating it could increase its sales and market share a great deal by lowering its prices. What’s more, the firm reported in November that it had supply chain issues and was taking multiple steps to rectify them.
Finally, ZVIA reported “the world’s largest retailer,” presumably WalMart (NYSE:WMT), had been trialing “the brand’s performance in the mainstream carbonated soft aisle.” Sales of Zevia’s products at WMT jumped by triple-digit percentage levels and were “outperforming expectations,” Zevia added.
The superior healthiness of Zevia’s beverages and its success at WalMart bodes very well for the long-term outlook of ZVIA stock.
Given these points, I think it has the highest ceiling among beverage stocks.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.
