1 Growth Stock Down 56% to Buy Right Now

Given that S&P 500 is down nearly 7% from its peak in mid-July, clearly more investors are nervous. And it is understandable. The global economy is not doing as well as has been assumed recently, and this is what can happen to stocks when this is the case.

Savvy investors, however, recognize this pullback for exactly what it is: a buying opportunity. A lot of stocks are now on sale at a deep discount because of this huge weakness. But it’s a sale that probably won’t last very long. If you’re interested in buying, you may want to do it sooner rather than later.

And if you’re specifically looking for a new high-risk/high-reward growth stock to pick up at a great price, consider getting into Celsius Holdings (CELCH -3.81%) while shares are down 56% from their May high.

Why Celsius could be unstoppable

It’s not exactly a household name, but if it rings a bell, there’s a reason. Celsius is a fast-growing energy drink brand targeting a market currently dominated by names such as Red Bull and Monster Drink.

Celsius does things differently than the two biggest names in the space. Celsius says its drinks are sugar-free and offer a “proprietary blend (of ingredients) that activates thermogenesis to boost metabolism and increase calorie burn.” Celsius has designed its products specifically for fitness-minded consumers who are increasingly embracing the brand.

The company has grown like gangbusters since its products started gaining real traction in 2019, shortly after CEO John Fieldly took the helm. His biggest contribution so far has been getting the company’s products into more store fridges, where the target audience is most likely to make a quick purchase decision. That’s a big reason why the company’s annual top line has grown from about $30 million then to more than $1.3 billion today. Last quarter’s top line of $402 million was up 23% year-over-year, breaking a Q2 record.

His partnership with PepsiCo it certainly doesn’t hurt either. As part of a major capital investment then made in Celsius, from 2022 PepsiCo is also a distributor of its energy drinks.

The thing is, there are many more opportunities ahead for this new brand.

The bullish argument for owning this growth stock

Celsius Holdings’ past growth is a tough act to follow. The company is not expected to repeat last year’s growth rate of 102% anytime soon, if not again. It’s just too much. This inevitable slowdown in sales is arguably what has left the stock so vulnerable to a selloff this year.

However, as is often the case, investors outperformed. Celsius is still doing better than the stock’s recent performance suggests.

Chief among the bullish arguments is that while revenue growth may be slowing, earnings growth is moving at a strong pace and should continue to do so going forward.

Data source: StockAnalysis.com. Chart by author.

This is largely due to relatively lower operating costs. Although big expenses such as marketing and advertising are still rising, they are not growing as much as revenue itself; scale is everything with a competitive, consumer-oriented business like this.

That said, Fieldly is entertaining some new business ideas that could prove to be enormous growth engines. Although entry into either market is still several years away, the company’s chief executive noted in a recent interview with FoodDive.com that health-oriented food and water are at least on the radar. In the meantime, he remains focused on expanding the brand’s presence in the important convenience store market and especially in the international market, where Celsius is just starting to turn up the heat.

The global energy drink market is expected to grow at an annual rate of 8.5% until 2032, according to a forecast from Straits Research. That’s healthy, but definitely not red hot.

In an industry where younger consumers are looking for something other than the often sugar-laden top brands, Celsius’ bright positioning as a fitness-oriented alternative means it’s poised to capture more than its fair share of that growth.

Celsius stock is way down for all the wrong reasons

So why has this growth stock with a great story been cut in half in less than three months?

A bear market environment has a lot to do with the latest part of this weakness, although most of it can be attributed to volatility alone. The bulls pulled ahead a bit in February and March, retaking several gains from last year’s big lead that never had a chance to cool off. Now the sellers are making the necessary correction that didn’t happen just then.

This stock will ultimately reflect the growth prospects of the underlying company. There are certainly plenty of them ahead, given how Celsius caters to the energy drink industry’s core customers and, in particular, their health concerns.

While Celsius Holdings doesn’t have a particularly large analyst following, more than half of those covering the stock consider the stock a strong buy. Their consensus price target of $76.53 is nearly 90% above Celsius’ current share price. The risk-tolerant newcomers would be stepping in at a time when the stock already has a lot of support from Wall Street, which isn’t a bad way to start a new trade.