Celsius Stock May Thrive as Pepsi and Coca-Cola Face Headwinds

Key Points

• Celsius stock and its steep discount to 52-week highs create a new buy opportunity for investors to consider today, backed by fundamentals.
• Weighed down by other names in its industry, Celsius stock has a path to overtake peers with better price action.
• Wall Street analysts agree through price targets that reflect a double-digit upside from today.

The stock market is often effective at quickly closing down potential inefficiencies and gaps inside sectors and specific stocks; however, sometimes, the attention is so focused on other news and spaces that these inefficiencies last longer than usual. This is where investors with enough courage to stomach going against the grain can lock in profits to make memorable years.

Such a case is available for analysis and consideration in the retail sector, specifically in shares of Celsius Holdings Inc. NASDAQ: CELH and their discounts to 27% of their 52-week high levels as they are dragged lower from similar (though less aggressive) sell-offs in other big names in the beverage industry over the past couple of quarters. Stocks like Coca-Cola Co. NYSE: KO and PepsiCo Inc. NASDAQ: PEP. Wall Street analysts still think there is enough upside in Celsius stock to close this gap against peers from today’s prices.

The sell-off in these stocks can be attributed to the new health department’s crackdown on certain brands that use ingredients like high-fructose corn syrup, one of the main components of Coca-Cola and Pepsi products today. However, this isn’t the case for Celsius products, and, therefore, they should clear the stock of any bearish price action by association moving forward. These beliefs will take on momentum when the market realizes how much safer the brand is compared to others.

Domestic Trends Poised to Propel Celsius Stock Back to Its Previous Highs

Now that the new administration in the United States plans to roll out new trade tariffs, some markets behave in ways that signal potential inflation pressures for the domestic economy. From these scenarios, it would be safe to assume that domestic production will answer these rising costs, which Celsius also benefits from.

From this new development, investors can see that the food and beverage industry showed the most momentum in the past quarter, as judged by the manufacturing PMI index readings. By beginning to expand in the middle of a several-month contraction in the sector, stocks in the industry will carry a better risk-to-reward setup.

As more capital finds its way to the food and beverage industry from PMI breakouts, Celsius stock can quickly become a top choice, just as it has recently been for Wall Street analysts and markets. Before checking Wall Street’s take and sentiment on Celsius stock, here are a few metrics for investors to check whether markets also recognize the upside in this name.

On a price-to-earnings (P/E) ratio, Celsius commands a significant premium through its 40.2x multiple today, above the staples sector’s average valuation of only 22.8x today. The same premium trend can be seen in the stock’s 25.4x P/B multiple compared to the sector’s 6.1x average.

These massive premiums might make the stock seem expensive for some investors. However, others will understand that the market is always willing to overpay for stocks expected to grow at above-average rates soon. Investors can now consult with Wall Street’s view on Celsius stock to check whether these valuations are justified.

What Wall Street Analysts Are Saying About Celsius Stock Today

Starting with valuations, Celsius's consensus price target is $54.4 a share today. That consensus implies an upside of up to 87.8% from where the stock trades today, which would seem bold by itself until investors remember that the stock is as low as it is today compared to its 52-week high prices.

Realizing that Celsius stock has so much upside left today, bearish traders have decided to reduce their positions and avoid further losses. Investors can see this trend at play through the 5.6% decline in short interest over the past month alone, a clear sign of bearish capitulation in the face of what could be.

But these analysts aren't the only ones willing to act on their optimistic views for Celsius stock today. Over the past 12 months, up to $3.3 billion of institutional capital has made its way into Celsius stock, with those from State Street leading the way as of November 2024 through a recent buy.

Boosting their Celsius stock holdings by 3.2% recently brought State Street's net position in the company to a high of $166.9 million today, or 2.3% ownership in the brand, to demonstrate additional bullish evidence that gives the stock a path to its double-digit upside potential.

Realistically, the catalyst for this upside will come from quarterly earnings announcements in Celsius stock, but there is the wild card in how markets will have to realize the company is not really part of the Coca-Cola and Pepsi crackdown due to its ingredients, an inefficiency that the market could likely close down sooner rather than later.