Celsius Holdings is Wednesday's IBD Stock Of The Day, as the top beverage producer makes its first test of the 10-week moving average following a huge run.
The Boca Raton, Florida-based fitness drink producer was founded in 2004 and is a top stock in the current market. Celsius Holdings stock is on the IBD 50 and the IBD Leaderboard watchlist. The company is a global consumer packaged goods business that sells its fitness energy beverage under the brand name Celsius. Its main competitors are Monster Beverage, which has an alliance with Coca-Cola, and Rauch's Red Bull.
Growth is booming. Celsius earnings spiked to 12 cents per share in the second quarter vs. 1-cent a year earlier. Revenue increased 137% to $154 million. Analysts forecast third-quarter EPS gaining 233% to 10 cents, according to FactSet. Wall Street expects sales to jump 70% t0 $162 million.
On Aug. 1, the company announced a distribution deal with PepsiCo. Under the arrangement, Pepsi will distribute Celsius globally, greatly widening the product's reach. As part of the deal, PepsiCo is investing $550 million, giving the drinking and snacks giant an estimated 8.5% CELH stock stake.
Celsius Holdings Stock
Shares dropped 3.9% to 98.23 during Wednesday's market trading. Celsius triggered the 7%-8% loss sell rule on a late August move from a short consolidation.
Still, from the May 10 low to the Aug. 26 peak of 118.19, Celsius stock skyrocketed 209%.
CELH stock has been finding support at its 10-week line for the past few weeks. The first or second 50-day/10-week test following a breakout can offering a buying opportunity.
Investors could use a strong bounce from the 10-week line as an aggressive entry. One option would be to buy CELH stock as it clears the Sept. 15 short-term high of 108.37. Right now, that would push Celsius a fair amount above the 10-week line.
The current market correction only adds to the risks. CELH stock has held up remarkably well, with its relative strength line right at highs, but if the market continues to skid lower, the odds would rise that Celsius would start to buckle.
Ideally, Celsius stock would consolidate for a few more weeks, forging a proper base as well as letting the 50-day/10-week line move higher.
Celsius Holdings stock has strong fundamentals and ranks first in the Beverages-Non-Alcoholic industry group, ahead of companies including Coca Cola and Keurig Dr Pepper.
CELH shares have a Composite Rating of 99. It has a 98 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement with a 1 to 99 score. The rating shows how a stock's performance over the last 52 weeks holds up against all the other stocks in IBD's database. The stock has an EPS Rating of 78.
Meanwhile, PEP stock dropped 0.3%, above its 200-day line but just shy of its 50-day. MNST stock dropped 0.8%, nudging above its 200-day. Coca-Cola fell 0.8% and KDP stock 0.7%.
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