If a time machine could take you back to the start of the 2000s — without the desire to open up a crypto wallet — what’s the No. 1 investment you would make?
Maybe Apple Inc. AAPL, which has sold 1.3 billion iPhones since 2007 and reported a $19.4 billion profit last quarter?
Or Tesla Inc. TSLA, which went from selling just 937 cars in 2009 to over 300,000 last year?
Some savvy income investors might consider Altria Group Inc. MO. The tobacco giant, formerly Phillip Morris International Inc., has grown its dividends by 631% since 2002. That streak of dividend hikes is possible when you sell an addictive product to hundreds of millions of people.
But there’s one little-known company that left these household names in the dust.
The Unknown Stock That Beat Every Wall Street Darling
Monster Beverage Corp. MNST is a company no one ever described as changing the world. It’s not putting an iPhone into every third human’s hand or solving climate change.
Yet this energy drink company returned 87,560% from 2000 to 2020 — enough to turn every $1 invested into $876.
Why was Monster Beverage 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 share price — much faster than a company that’s already a behemoth.
But there’s bigger factor at play. Apple spent $446 million on research and development in 2002 to stay ahead of its competitors and maintain its existing operations. 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. By contrast, Monster Beverage spent just $4.6 billion on operating costs in 2022.
It turns out that an energy-drink business is a lot less capital-intensive than a tech business — and this difference, compounded over the years, means that Monster Beverage had hundreds of billions of dollars more to plow into growing its business by expanding operations and claiming greater market share.
A similar dynamic benefitted Coca-Cola Co. KO. If you’ve ever wondered why the ticker symbol is KO rather than CO or CC, it’s because Wall Street settled on an acronym for “knock out.” The sentiment was that investing in Coca-Cola was a slam dunk because the invaluable brand name commanded loyalty from hundreds of millions around the world. How could investors go wrong?
Sure enough, $100 invested in Coca-Cola at the time of its 1919 initial public offering (IPO) would have turned into $1.25 million a century later. A lot of factors are behind that performance, but it’s not a coincidence that Coca-Cola had to pay just $24 billion in operating costs in 2020, or less that 10% of what Apple paid.
Benzinga has a lot to say on 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 one company with striking parallels 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 since 2012, is even smaller than Monster Beverage was at the turn of the century.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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