The growth stock meltdown of late February and early March has created some compelling buying opportunities. One such opportunity is in one of my favorite small-cap growth stocks, healthy energy drink maker Celsius (NASDAQ:CELH). Back in early September 2020, I told subscribers of my financial newsletter The Daily 10X Stock Report — which is aimed at delivering to your inbox, every single day, a stock pick that could rise by at least 10X — that CELH stock was a strong buy because Celsius was turning into the next Monster (NASDAQ:MNST).

At the time, CELH stock was trading below $20. Four months later, in January, Celsius stock had skyrocketed to $70 — representing a whopping 250% return in less than half a year.

To read more about how to get in early on breakthrough stocks that can soar hundreds of percent in just months.

But back to CELH stock… as you can see, the stock has plunged recently, as the growth sector meltdown coupled with a disappointing fourth quarter earnings report to spark a 35% drop in the stock price.

This dip is a golden buying opportunity into one of the most exciting hypergrowth stocks in the market today.

Here’s why.

CELH Stock: The Energy Drink Company of the Future

I’m a huge fan of CELH stock long-term because, from where I sit, Celsius looks like the healthy energy drink company of the future — a company that will, one day, challenge Monster and Red Bull for supremacy in the energy drink category.

Here’s the story.

Humans love to feel energized. Naturally, they also love energy drinks. That’s why the energy drink market is one of the larger beverage markets in the world at $60, and also the fastest growing beverage category with a 7% compounded annual growth rate.

But this hypergrowth category has grown out-of-sync with consumer demand. That is, consumers are increasingly demanding healthy, all-natural, and functional foods and drinks. Yet, the titans of the energy drink industry — Red Bull, Monster, and Rock Star — are still selling a bunch of sugar-loaded, not-that-good-for-you energy drinks.

This reality represents an enormous opportunity for Celsius Holdings, a relatively new and small energy drink maker that is cutting out a niche for itself in the overlap of rising pro-health trends and huge energy drink demand.

Capitalizing on the Pro-Health Shift

Leaning into its proprietary scientific formulation which combines green tea with EGCG, ginger and guarana seed to catalyze thermogenesis, Celsius has a created a portfolio of unique, functional healthy energy drinks that have been proven to energize, accelerate metabolism, and burn body fat and calories… all at once.

Plus, the drinks are vegan. Gluten-free. Non-GMO. Contain zero sugar. Have zero preservatives. Zero artificial colors or flavors. Zero aspartame. You know… all the good stuff that young, pro-health consumers are looking for in a “clean label” these days.

To that end, Celsius has created a scientifically superior and socially more relevant energy drink which has the potential to turn into the next big thing in this massive category.

Over the next several years, I fully expect Celsius to leverage these pro-health drinks with its eco-friendly branding to rapidly expand product distribution, drum up huge consumer demand, and ultimately turn into a mini-Monster.

The upside for CELH stock comes from the fact that Monster is worth $50 billion, while Celsius is worth just $3.4 billion today.

Business Momentum Is Building

My bullishness on CELH stock is reinforced by the company’s strong execution over the past several years, in which the company has rapidly expanded product distribution and increased demand to the tune of a 665% increase in sales since 2015.

Investors are concerned that this growth trend is slowing. Fourth quarter revenues declined from the third quarter. That’s why CELH stock fell off a cliff recently. But this drawdown in revenues is due to Covid-19 related restrictions in the company’s international markets. Backing those one-off headwinds out, the underlying business momentum here remains vigorous.

The company continues to rapidly expand distribution. In 2020, Celsius’ distribution footprint expanded by 18,000 stores to 82,000 stores by the end of the year. Management expects this expansion to accelerate in 2021, as retailers who have delayed planogram resets — many of which include more shelf space for Celsius — execute those resets at Covid-19 restrictions ease.

Perhaps more importantly, Celsius continues to expand market share in the energy drink category at a rapid pace.

According to U.S. SPINS data, Celsius’ sales for the 52 weeks ended January 24, 2021 increased 58% year-over-year, about 8X that of the energy drink market’s overall growth rate. Concurrently, recent Nielsen data for the four weeks ended Feb. 20, 2021 shows that Celsius’ sales rose 98% in that time frame, with the next closest competitor (Red Bull) registering just an 18% growth rate.

And on Amazon (NASDAQ:AMZN) — which is Celsius’ most established channel — Celsius increased market share in February by 2.1 percentage points to 14.5%. In that world, Celsius is now almost as big as Red Bull (14.7% share).

From head to toe, then, the Celsius growth narrative is still on fire — despite the recent plunge in CELH stock.

That ultimately means that this selloff is a buying opportunity.

Celsius Stock Is Undervalued

By my numbers, Celsius stock is dramatically undervalued following its recent 35% haircut.

Celsius owns about 14.5% of the energy drink market on, where distribution is equal among all energy drink players. I fully expect, given Celsius’ impressive sales velocity and shifting consumer demand for healthier drinks, that physical retail distribution will equalize over the next several years, too. By 2030, Celsius drinks should be as widely available in grocery, general merchandise, and convenience stores as Monster and Red Bull drinks.

Assuming so, Celsius’ overall share of the energy drink category should rise to 14.5% over time. According to management, that equates to a $2 billion revenue opportunity. That’s roughly where I think revenues will trend over the next decade.

Assuming similar profit margins and valuation multiples as Monster, my modeling suggests that CELH stock is worth around $70 today.

That’s why I think CELH stock will make a run back to all time highs once interest rate volatility passes.

Bottom Line on CELH Stock

The growth stock meltdown has created multiple golden buying opportunities. CELH stock is one such opportunity.

But it’s not the best opportunity.

Instead, the best opportunity is in a company that reminds me of a young Amazon. Indeed, I think buying this stock today could be like buying AMZN stock back in 1997 — before it soared thousands of percent.

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