Celsius presentation from the Pershing Square Challenge
In Tuesday's e-mail, I shared the first-prize-winning presentation on food-delivery service DoorDash (DASH) from the 19th annual Pershing Square Challenge.
And yesterday, I analyzed the company's financials and valuation. I concluded that, while DoorDash is a strong, market-leading company, the stock wasn't cheap enough to be interesting at today's price.
Today, I'd like to share the 85-slide presentation by Columbia Business School students Hideyuki Okada and Jyas Totlani, which won third place (and $20,000) for their excellent pitch of energy-drink maker Celsius (CELH).
Please keep in mind that I'm not recommending the stock. If that were the case, I would share it first, along with our full analysis, with Stansberry's Investment Advisory subscribers. (You can become one by clicking here.)
Rather, I want to share what I learned about an interesting company and industry...
The students started by outlining the three pillars of their investment thesis. At the stock's then-current valuation of 22 times forward earnings, they detailed how they think it will double in their base-case scenario – compounding at 25% annually – over the next three years:
Here's their overview of Celsius, which became the largest sugar-free energy-drink company in North America after the major acquisition of Alani Nu last year:
hey argue that only Celsius captures all growing elements of the energy-drink space – sugar-free, different flavors, and a focus on female, Gen Z, and millennial consumers.
The students conducted a survey of 554 "diverse active energy drinkers," which shows strong brand loyalty for both Celsius and Alani Nu, with an intent to increase consumption in the next six months:
They're particularly bullish on Alani Nu, which is growing rapidly:
They also believe the deepening partnership with PepsiCo (PEP) and its distribution network will drive sales growth:
The third pillar of the students' investment thesis is that margins will expand as the company grows:
To their credit, they also outlined the bear case and responded to each major viewpoint:
They concluded by showing that, despite high projected earnings growth relative to the four biggest competitors in the space...
... Celsius has the second-lowest multiple of enterprise value ("EV") to forward sales:
And its forward price-to-earnings (P/E) multiple is right in the middle of its peers:
I applaud the students for their excellent work and thank them for allowing me to share it with my readers.
As I did with DoorDash, tomorrow I'll look at Celsius using my standard framework by analyzing its financials and valuation. So stay tuned!
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.
P.P.S. Susan and I flew from Dublin to Venice this morning. On our last day in Ireland yesterday, we took a three-hour hiking tour with a farmer, who told us about the local flora and fauna and the history of the country while we braved the howling winds. Then we went to the magnificent Cliffs of Moher (where we were almost blown over!) before driving back to Dublin. Here are some pictures:
