Buying The Best GenZ Stock | Trade Alert

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The Best GenZ Stock?  Why I Am Long Celsius

I am building a first position in the Nasdaq-listed, energy drink company Celsius Holdings $CELH (company website) and like to share my investment thesis below!

Company Overview

• • Founded: 2004 (20-year history)
  • Revenue: $1.3 billion in 2023
  • Margins: Gross Margin 50%, Operating Margin 22%, Net Margin 20%, FCF Margin 16%
  • Debt: The company is debt-free (!!)
  • Market Share: 3rd best-selling energy drink in the U.S., after Red Bull and Monster
  • USP: Zero sugar, caffeine-based energy drinks highly favored by GenZ

Favorite Energy Drinks By Generation

Best Energy Drink Stocks

Celsius is the 2nd largest energy stock company in the U.S. (Red Bull as the largest is a private company).

But in terms of growth, it is leading by a wide margin (111% is actually due to PepsiCo’s overstocking, more realistic growth rate is 39-50%.

Company Overview

• Sales Growth – 50% YoY growth in sales and rapid growth
• Debt-Free – Strong financial position with zero debt 
• PepsiCo $PEP owns an 8.5% stake, investing $550m in 2022; its massive distribution network is helping Celsius scale rapidly
• Expansion Plans: Celsius recently expanded into six additional countries in 2024 (not yet present in the EU or Asia!)
• Contributed 47% of all energy drink category growth in Q2 2024; holds #3 market share in the U.S. energy drink market at 11%
• Disclaimer: I am also long $PEP in my All-Weather Portfolio

What Makes Celsius The Best Gen Z Stocks?

1️⃣ Generation Z loves Celsius, check out the below Amazon’s “bestseller” page; out of the top 10 spots, Celsius takes 4!

2️⃣ Hyped – similar to when it was believed Taurin was in Red Bull, Gen Zs believes CELH has Ozempic in it, resulting in weight-loss

3️⃣ Dominating TikTok – TikTok and Instagram-friendly! With 2b views across both platforms (multiples more compared to e.g. Monster)

4️⃣ Mind Capture – Celsius successfully captured the consumer’s mind as the Generation’s energy drink – invaluable!

Fundamental Reasons To Buy

✅ Balance Sheet: $CELH is debt-free and makes money with healthy margins – no existential risks

✅ Strong Growth Potential: Despite the short-term price decline, I believe the fundamentals remain intact

✅ PepsiCo as a Key Partner: PepsiCo’s backing and distribution reach can continue to fuel Celsius’s growth

✅ Long-Term Play: Celsius is well-positioned to capture market share among younger consumers, especially Gen Z.

✅ Growth Potential: Celsius has not entered the European or Asian market; exciting room to grow

✅ Valuation: I believe the market has overreacted to short-term concerns, creating a compelling risk/reward opportunity.

Technical Chart Analysis Reasons To Buy

Now that we know the fundamental story of the company is looking good to excellent, let’s take a quick look at its stock chart.

• The stock is beaten down by 67% from its all-time high.
• It recently managed to climb above its 21-day EMA (exponential moving average)
• There is a gap on the daily at $30.50 – $31 which I hope it will fill

So, How To Trade The Best Gen Z Stock?

Here is my trade setup:

• I bought a first position of 300x shares at $34 

• I am waiting for the price to come down to $30.55 to fill the gap
• I placed a 2nd purchase order at that price level ($30.55)
• Once it reaches $55, I will sell 50%
• Once it reaches $68, I will sell the remaining 50%

As always, this is not financial advice. I am only sharing what I do. Please do your own research.

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