The best-performing stock of the last three decades isn't one of the tech titans you'd expect.
It's actually an energy drink company: Monster Beverage.
Monster's stock has been rising for decades, as has its revenue, which has grown steadily for 31 consecutive years.
Between Feb. On December 14, 1994 and Wednesday, Monster's stock rose approximately 200,000%. That means if a consumer invested $1,000 in 1994, the stake would be worth about $2 million today.
According to analysts, several factors are responsible for Monster's success. But a lot of it has to do with its executives, co-CEOs and South African billionaires Rodney Sacks and Hilton Schlosberg, who took advantage of a fairly new market early on.
“Some of this is clearly in the right place and right time,” said Mark Astrachan, managing director of consumer and retail operations at Stifel. “I think it's also part of being really good at what you do, because you can't be as lucky as they have been for so long without being really good at running a business.”
Monster Beverage is a holding company consisting of subsidiaries that produce and manufacture beverages including energy, alcohol, teas and coffee.
In the third quarter of last year, the company reported net sales of $1.86 billion, up 14.3% from the same period last year. The Monster Energy segment accounted for $1.71 billion of this.
Monster Beverage was founded in 1935 as a family juice company called Hansen's. It was later named Hansen Natural Corporation.
Sacks and Schlosberg acquired it and took it public in 1990 after it filed for bankruptcy in 1988. Since then, the company has undergone a complete transformation. While the stock traded for just a few cents at the time, it closed at $55.02 per share on Friday.
Monster released some energy drinks under its previous name in the 1990s. But analysts said the company didn't really take off until 2002, when it launched a drink of the same name.
“They built it right,” said Nik Modi, managing director of RBC Capital Markets. “They have built up the distribution of the brand very slowly and methodically, ensuring that it is strong in every market it is in and that every retailer that operates there has good momentum.”
Analysts said executives know their customers well and are focused on action sports and other events such as motocross, UFC, bullfighting and Nascar rather than traditional television or magazine advertising. It was well received by the younger workers who attended these events.
“People are so excited about this brand,” Modi said.
The company caught the attention of beverage giant Coca-Cola, which entered into a strategic partnership with the company, now called Monster Beverage, in 2015.
At that time, Coke acquired a 16.7% stake in the company for more than $2 billion. Today this proportion has grown to around 20%.
Coke agreed to become Monster's preferred global distributor and the two companies swapped ownership of several brands. Monster got energy drinks like NOS, Full Throttle, Burn and Relentless, while Coke got Hansen's Natural Sodas, Peace Tea and Hubert's Lemonade.
“They have obviously shown that they can grow globally,” Modi said. “And that's basically what they did and what drove most of the growth in the stock's outperformance.”
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