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Research Report

Monster Beverage gets perfect score using Buffett model portfolio Add to ...

Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.

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California-based Monster Beverage Corp. makes energy drinks and alternative beverages under such names as Monster Energy, Java Monster, X-Presso Monster, M-3, Worx Energy and Hansen’s natural sodas and juices. It has a market cap of $12-billion (U.S.).

Monster Beverage gets a 100-per-cent score from the Warren Buffett-based model, thanks in part to having upped earnings per share in all but one year of the past decade.

It has averaged a 34-per-cent return on equity over the past decade, another reason the Buffett model likes it.

The company has grown earnings at a 21-per-cent pace over the long term, more than doubling the non-alcoholic beverage industry average (using an average of the 3-, 4-, and 5-year EPS growth rates), which the Martin Zweig-based model likes.

Earnings growth has been driven by revenue growth (18 per cent, using an average of the 3-, 4-, and 5-year sales growth rates), not one-time unsustainable factors, another reason the Zweig model has some interest.

Monster Beverage has a solid 77 12-month relative strength, even though the non-alcoholic beverages industry average is just 44.

The company has no long term debt, which both the Zweig and Buffett models like. It has strong 15-per-cent profit margins, and it has a strong 3.7 current ratio which the Ben Graham-inspired model likes.

John Reese is long MNST.

Click here for a complete breakdown of Validea's investing guru report.

 

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