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Monday, April 19, 2021 6:22:56 PM
By: Simply Wall St | April 19, 2021
Let's talk about the popular Monster Beverage Corporation (NASDAQ:MNST). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Monster Beverage’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What's the opportunity in Monster Beverage?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.43% above my intrinsic value, which means if you buy Monster Beverage today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $90.54, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Monster Beverage’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 23% over the next couple of years, the future seems bright for Monster Beverage. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in MNST’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on MNST, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
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Recent MNST News
- Monster Beverage Reports 2024 First Quarter Results • GlobeNewswire Inc. • 05/02/2024 08:04:00 PM
- Monster Beverage to Report Financial Results for 2024 First Quarter on May 2, 2024 • GlobeNewswire Inc. • 04/26/2024 12:00:00 PM
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- CORRECTION – Monster Beverage Reports 2023 Fourth Quarter and Full-Year Financial Results • GlobeNewswire Inc. • 02/29/2024 04:11:01 AM
- Form 8-K/A - Current report: [Amend] • Edgar (US Regulatory) • 02/29/2024 02:49:13 AM
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- Monster Beverage Reports 2023 Fourth Quarter and Full-Year Financial Results • GlobeNewswire Inc. • 02/28/2024 09:10:00 PM
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- Monster Beverage to Report Financial Results for 2023 Fourth Quarter on February 28, 2024 • GlobeNewswire Inc. • 02/21/2024 09:00:00 PM
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