We are adding Celsius Holdings (CELH) to our Best Idea Long List and hosting a Black Book presentation on it & the rest of our caffeinated Best Idea Longs (MNST, BRCC, WEST).
EVENT DETAILS:
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Hedgeye’s Macro Team continues to project two more quarters of Quad 4 in the first half of 2023. Consumer Staples historically is one of the best-performing sectors in Quad 4. However, investors are beginning to think about what lies beyond Quad 4 and how to prepare.
Our Macro Team has called for another sell-off in the market which would be an opportunity to add one of our favorite trend and tail duration Long Ideas. In Consumer Staples, we recommend companies with strong secular growth tailwinds. One such tailwind is an emerging trend within caffeine, a habit-forming drug consumers are using more in this digital environment of always being connected. We have several Best Idea Longs in the caffeine sector from coffee companies including Westrock Coffee (WEST) and Black Rifle Coffee Company (BRCC) to energy drink companies Monster Beverage (MNST) and Celsius Holdings (CELH).
Celsius is carving a niche in the growing energy drink category, but also bringing in new consumers. Celsius has aligned itself with healthy and better-for-you attributes that extend well beyond young consumers and the gym. Competitors are responding, but brand associations work against them and for Celsius. We see the niche becoming a significant portion of energy drinks. The PepsiCo distribution agreement and investment open more doors for growth and adds visibility to near-term results. We view the recent pullback in shares after a lawsuit judgment of $83M against Celsius as a buying opportunity.
We are hosting a Black Book presentation on Monday at 10 AM to review our top investment ideas that share the secular growth driver of caffeine. We are adding Celsius Holdings to our Long List as part of the presentation. We will review how Celsius’ market position opens up different channels, consumers, and consumption events than existing competitors.
