Growth stock Celsius is building support at its 10-week moving average, according to IBD MarketSmith. The beverage company is today's pick for IBD 50 Stocks To Watch.
CELH shares surged on May 10 from a buy point of 122.24 after a strong first quarter for Celsius. Sales rose 95% to $260 million. Earnings per share of 40 cents were up an impressive 344%.
According to John Fieldly, president and chief executive officer, sales rose as the company continued to benefit from its partnership with PepsiCo.
In August 2022, the fitness drink company partnered with PepsiCo on a long-term strategic distribution agreement.
PepsiCo made an investment of $550 million in exchange for CELH convertible preferred stock priced at $75 per underlying share, for an 8.5% stake in Celsius on a converted basis.
The preferred shares also earn an annual 5% dividend. As a result, PepsiCo became the preferred global distribution partner for Celsius across retail and food service channels.
Second-quarter earnings are due on Aug. 10. Analysts polled by FactSet expect earnings to grow a whopping 158% to 31 cents per share on sales of $274.6 million — a 78% increase from the previous year.
Growth Stock Has Strong Ratings
The growth stock has a Composite Rating of 88, below a desired minimum of 90. But the Relative Strength Rating of 97 is nearly perfect. The EPS Rating lags at 40 because the company reported losses in the fiscal third and fourth quarters of 2022 and for the full year.
Sales growth, however, has been impressive over the past seven quarters, ranging from 71% to 192%.
Celsius makes fitness drinks and powdered products under the brand name Celsius. The drink has thermogenic properties that increase metabolism. The company is in IBD's nonalcoholic beverages industry group, which holds 33rd place among IBD's 197 industry groups.
The stock is rebounding after a gentle pullback to the 10-week moving average. That creates a buy area from about 141 to 155. Shares reversed lower Thursday, although in light volume.
Fund ownership is incredibly strong, with 92% of the stock under institutional sponsorship. More funds have been buying the stock over the past six quarters, which gives the stock an Accumulation/Distribution Rating of A.
Mutual funds owning shares of Celsius include the Invesco Discovery Fund (OPOCX) and the Columbia Small Cap Growth Fund (CMSCX). Exchange traded funds holding the growth stock include Global X Health & Wellness ETF and the Future Fund Active ETF.
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