Celsius Holdings Inc (CELH)

[NewJerichoMan]

Take a look at JSDA by means of comparison. They have smaller revenues than CELH and lose less on average and their cash flow is better. They sell at a 1.5X sales multiple.

Very aware of the comps.




JSDA had revenues of ~$13.6M in 2013, 2014, and 2015. It isn't growing and very likely will never scale even under ideal conditions. This is why you should focus on top line growth rather than bottom line.

I have no position in CELH but it is growing. 97% of beverage companies don't make it over $10M in annual sales ever. CELH recent annual revenues: 2013 = $10.6M; 2014 = $14.6M; 2015 = $17.2M, which is good enough for a CAGR of 27%. It's in rarified air and still growing.

Now do I think CELH's current P/S ratio a bit ahead of itself? Yes. Without strong hands holding, I doubt the share price would be where it's at today. But it can ultimately justify it's lofty valuation if it keeps growing (rapidly).

I think you'll find the big guys have no interest.

I think the data says just the opposite. Coke and others are focusing more and more on the low end. It's much cheaper to get a company while it's young (full of potential) rather than wait until it's mature (see Vitamin Water and Monster) and pay top $$$.

Coke just bought ZICO when it had ~$37M in annual revenues at the time. It recently took a 30% position in SUJA (private company). It also took a very early position in Aloe Gloe via LA Libations. It has an investment in Health Ade Kombucha (sold in only 3,000 outlets) via First Bev.

LA Libations and First Bev are independent companys but they have strong ties to Coke. They serve as an incubator for Coke, give interesting products a test run, see if they could ever scale.

The Red and Blue systems can't grow their flagship products anymore, CSDs are a declining market, coming under increased scrutiny. They find growth in smaller segments, picking best in breed in each category, and they're doing it earlier and earlier in their life cycles.