Tuesday, November 17, 2020

A Small Cap Equity holding: Celsius Holdings, Inc. (CELH, $31.96): “Temperature is Rising for Celsius After Earnings Beat” by: Will Steinhafel, AIM Student at Marquette University

Celsius Holdings, Inc. (CELH, $31.96): “Temperature is Rising for Celsius After Earnings Beat”

By: Will Steinhafel, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


• Celsius Holdings, Inc. (NASDAQ: CELH) engages in the development, marketing, sales, and distribution of calorie-burning beverages. The company operates primarily in the United States and Canada. 

• Celsius’ strategic movement towards a direct store delivery (DSD) has resulted in the growth of their distribution network across the United States. 

• E-commerce presence grows as COVID-19 related shutdowns result in decreased sales from brick and mortar stores. 

• Since announcing Q3 earnings on November 12, 2020, CELH’s stock is up 29%.  

• CELH looks to be headed towards continued growth in 2021 as distribution channels and brand recognition grow. 

Key points: 

Despite COVID-19 shutdowns, Celsius Holdings posted strong growth in 2020 and looks continue this momentum into 2021. Throughout the year, Celsius’ management team expanded its DSD distribution and wholesale networks through entering into agreements with Anheuser-Busch, PepsiCo, Keurig Dr. Pepper, Molson MillerCoors, and Big Geyser. As a result of these strategic partnerships, Celsius anticipates that its distribution network covers approximately 75% of US metropolitan markets. 

Celsius announced a recording breaking Q3 2020 that featured over an 80% revenue growth in comparison to Q3 2019, as well as the addition of 19,000 retail locations in the last twelve months. CELH’s e-commerce channels grew by over 100% in Q3 2020. Amazon sales were the dominant driver of this growth and accounted for 22% of domestic revenue in the quarter.  

Despite an industry wide aluminum can shortage in the United States, Celsius expects to meet demand in 2021 by utilizing their global relationships to source the needed cans. This disruption will result in an increase in cost of goods. Given its growing distribution network and increased brands recognition, CELH is well positioned to capture additional market share and grow revenues in the coming quarter and FY 2021. 

What has the stock done lately?

Celsius reported Q3 earnings on November 12, 2020. CELH beat expected earnings and offered promising guidance for Q4 2020 and 2021. After beating earnings, CELH’s share price increased by 29% to $31.96.

Past Year Performance: 

CELH’s share price has increased by 711% over the past year. The 52-week high-low for CELH is $32.75-$3.94. During the March sell off, Celsius dropped to a low of $3.94 but has since recovered incredibly and looks to continue growth into 2021. 

Source: FactSet

My Takeaway

Celsius Holdings’ movement towards DSD distribution relationships has proven successful through Q3 2020 and shows promise of continued network expansion. Management’s successful leadership through COVID-19 and the current aluminum can shortage should give investors’ confidence in their ability to bring CELH into sustained growth. The momentum attributable to the growth of Celsius’ DSD distribution network, increased e-commerce presence, and strong management team looks to continue into 2021 as CELH aims for new highs. It is recommended that CELH remain in the AIM fund.

Source: FactSet