If a time machine could transport you back to the early 2000s — without the urge to open a crypto wallet — what’s the No. 1 investment you’d make?
It can Apple Inc. (NASDAQ: AAPL ), which has sold 1.3 billion iPhones since 2007 and reported $19.4 billion in earnings last quarter?
THE Tesla Inc. (NASDAQ: TSLA ), which went from selling just 937 cars in 2009 to over 300,000 last year?
Some smart income investors might consider it Altria Group Inc. (NYSE: MO). The tobacco giant, formerly Phillip Morris International Inc., has increased its dividend 631% since 2002. That string of dividend increases is possible when you’re selling an addictive product to hundreds of millions of people.
But there is one little-known company that has left those household names in the dust.
The Unknown Stock That Won Every Wall Street Darling
Monster Beverage Corp. (NASDAQ: MNST ) is a company no one ever described as changing the world. It’s not putting an iPhone in the hand of every third person or solving climate change.
However, this energy drink company returned 87,560% from 2000 to 2020 — enough to turn every $1 invested into $876.
Why has Monster Beverage been able to dramatically outperform these world-changing companies?
Part of the reason comes from its size—Monster Beverage recorded $92 million in revenue in 2002, while Apple reported $5.7 billion. A smaller company can grow revenue — and ultimately its earnings and stock price — much faster than a company that’s already a behemoth.
But there is a bigger factor at play. Apple spent $446 million on research and development in 2002 to stay ahead of its competitors and maintain its existing businesses. By 2022, its annual operating costs had reached $274 billion.
To keep the lights on, Apple had to spend $274 billion or the company could no longer make and sell products. In contrast, Monster Beverage spent just $4.6 billion on operating expenses in 2022.
It turns out that an energy drink business is far less capital-intensive than a technology business—and that difference, compounded over the years, means Monster Beverage had hundreds of billions of dollars more to grow its business by expanding its operations and claiming more market share.
A similar dynamic benefited Coca-Cola Co. (NYSE: KO). If you’ve ever wondered why the ticker symbol is KO instead of CO or CC, it’s because Wall Street settled on an acronym for “knock out.” The sentiment was that the investment in Coca-Cola was a slam dunk because the priceless brand name commanded loyalty from hundreds of millions around the world. How could investors go wrong?
Certainly, $100 invested in Coca-Cola at the time of its initial public offering (IPO) in 1919 would have turned into $1.25 million a century later. Many factors are behind this performance, but it’s no coincidence that Coca-Cola had to pay just $24 billion in operating expenses in 2020, or less than 10% of what Apple paid.
Benzinga has a lot to say about the battles between tech giants to capture hundreds of billions of dollars in market share of revolutionary trends like blockchain technology, 5G and clean energy. But as stocks like Monster Beverage show, slow and steady can sometimes win the race.
Benzinga is tracking a company with striking similarities to Monster Beverage. It also has a product designed to improve energy levels and performance. It’s already profitable, but with just $17 million in sales as of 2012, it’s even smaller than Monster Beverage was at the turn of the century.
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