We recently published a list of 12 Best FMCG Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Monster Beverage Corporation (NASDAQ:MNST) stands against other best FMCG stocks to buy according to billionaires.
Historically, the consumer-packaged-goods (CPG) industry outperformed most of the other industries, mainly due to the high growth and consistent margins, says McKinsey. However, since 2012, numerous factors, such as inflation, market saturation, significant competition, fluctuating consumer tastes and behaviors, along with a fragmented consumer base resulted in growth challenges. Given increased interest rates and elevated industry multiples over the previous few years, there has been lesser deal activity, says the firm. Furthermore, a range of leading CPG companies continue to take a more measured approach, emphasizing midsize deals and aiming to achieve cost and growth synergies.
What Lies Ahead?
The broader downward trend of rates, along with strong, cash-rich balance sheets (and increased capability to take more affordable debt) of CPG companies can result in higher deal activity over the near future for the sector, says McKinsey. The firm expects a mix of 3 types of transactions, i.e., signature, sector-shaping deals, sizable horizontal deals allowing for greater subcategory consolidation, and targeted spin-offs of brands and business units possessing limited synergies or growth enablers with their current owner.
While the consumer sector remains broad, much of the analysis was focused on the F&B sector. McKinsey anticipates to see increased activity throughout CPG sectors, mainly in the personal care and beauty sectors. However, it also expects that the F&B sector might continue to capture a significant share of deals.
Deloitte believes that, in 2025, the consumer products companies are likely to address the product portfolio and mix in a bid to entice the consumer and invest across the broad set of demand-generation capabilities. Furthermore, the businesses are projected to develop transformative efficiency so that savings can be produced, which can help finance such investments. Deloitte points out that increasing the unit volume sold remains an important lever that can support in driving profitable growth. Notably, some consumer products companies, mainly the profitable growers, remain focused on innovation to re-engage consumers. Deloitte also highlighted that high-performing companies seem to be adopting a clear-eyed view of their portfolios, and they continue to divest and acquire as needed.
Our Methodology
To list the 12 Best FMCG Stocks to Buy According to Billionaires, we used a screener and Insider Monkey’s exclusive database of billionaire stock holdings to shortlist the companies catering to the broader FMCG space. For the stocks with the same number of billionaire holdings, we have used the number of hedge fund investors as a secondary metric to rank the stocks, as of Q4 2024. We also mentioned the hedge fund sentiments around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is Monster Beverage Corporation (MNST) the Best FMCG Stock to Buy According to Billionaires?
A shelf filled with a variety of bottles of energy drinks, juices, and sodas in a convenience store.
Monster Beverage Corporation (NASDAQ:MNST) is engaged in the developing, marketing, selling, and distributing energy drink beverages and concentrates. Christopher Carey from Wells Fargo maintained a “Buy” rating on the company’s stock with a price objective of $60.00. The rating is backed by a combination of factors demonstrating a favourable outlook for the company. The analyst has highlighted the improving trends in the U.S. energy drink category, together with the long-term growth potential in international markets. Some of the critical highlights consist of accelerating growth in the US market as well as an increase in shelf space for energy drinks. Despite the challenges, Carey opines that Monster Beverage Corporation (NASDAQ:MNST)’s growth prospects and strategic initiatives justify the rating.
Elsewhere, Needham analyst Gerald Pascarelli reiterated the neutral stance on the company’s stock, providing a “Hold” rating. The analyst’s rating is backed by factors demonstrating a balanced outlook. As per the analyst, Monster Beverage Corporation (NASDAQ:MNST) closed the year on a strong footing and is entering 2025 with favorable momentum, thanks to the stable elasticities after a price increase. The analyst anticipates that Monster Beverage Corporation (NASDAQ:MNST)’s revenue can improve during the summer months as the effects of the price increase become pronounced.
Overall, MNST ranks 8th on our list of best FMCG stocks to buy according to billionaires. While we acknowledge the potential of MNST as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than MNST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
