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If you had to name a stock that's turned $1,000 into more than $50,000 in the last four years, you'd probably guess a disruptive technology company doing something with software or AI.
But one company that was able to pull off that remarkable feat did it without any dramatic technological innovations. That's Celsius Holdings (NASDAQ: CELH), the energy drink maker that has been one of the top-performing stocks of the last four years.
As the chart below shows, Celsius stock is up nearly 5,000% over the last four years, dwarfing the returns of the S&P 500.
CELH data by YCharts.
Now, Celsius is at something of a crossroads, as it's grown enough to establish a significant presence in the energy drink market. It's attracted Pepsico as a distribution partner, and it rewarded investors with a 3-for-1 stock split in November 2023.
Is it too late to invest in Celsius, or can the fast-growing energy drink company reward new investors and still make them millionaires? Let's take a look at the evidence following Celsius' latest earnings report.
1. Growth is still strong
Celsius has come virtually out of nowhere since the start of the pandemic. The brand got its start in gyms and fitness centers, and then gained a following on Amazon during the pandemic, benefiting in part from the stay-at-home effect.
It's since gained distribution in grocery stores, membership clubs like Costco, and convenience stores, benefiting from its partnership with Pepsi.
Reported revenue growth slowed to 37% in the first quarter, but that figure is significantly slower than underlying growth because of inventory corrections at Pepsi, which makes up 62% of the company's sales in North America.
Demand among the end consumer remained strong as sales in chain stores in the U.S. rose 72%, according to data from Circana.
Management also touted upcoming shelf space gains in the retail channel this summer, which it said would help propel its market share in the energy drink sector above its current level of 11.5%.
2. Margins are expanding
Celsius delivered impressive gross margin expansion in Q1, from 43.8% to 51.2%. This reflects the company's own inventory controls, lower raw material pricing, and reduced freight costs.
Management said it had achieved $50 million in inventory optimizations over the last 15 months, and is gaining leverage as it grows.
Over the long term, the company has said it's targeting gross margin in the upper 40s, but the Q1 results show it could exceed that.
Operating margin also expanded, leading operating income to nearly double, and earnings per share jumped from $0.13 to $0.27. Continuing margin growth would be a key source of value creation for investors.