2 Beverage Stocks to Avoid This Month

NYSE: KDP | Keurig Dr Pepper Inc.  News, Ratings, and Charts

KDP – Beverage companies are reshaping their businesses to offer lower sugar drinks, sustainable packaging, and advanced ordering systems. However, not all companies have the financial wherewithal to adopt these changes promptly. Furthermore, with the surging COVID-19 cases, many consumers are again avoiding away-from-home beverage consumption due to the public health risks associated with it. Given this backdrop, we think investors are better off avoiding beverage stocks Keurig Dr Pepper (KDP) and Monster Beverage (MNST). Read on.

With accelerating digitization and advanced ordering systems, beverage companies have witnessed solid revenue growth over the past months. However, people are again taking a pass on away-from-home beverage consumption due to rising health concerns with the rising spread of the COVID-19 omicron variant. The negative effects of energy drinks and other sugary drinks is also a growing cause for concern among consumers.

Though many beverage companies are trying to reshape their products to address concerns related to health issues by focusing on dairy-free and plant-based alternatives, sugar reduction, and sustainable packages, not all companies are fundamentally strong enough to adopt such changes quickly.

Therefore, we believe financially weak beverage stocks Keurig Dr Pepper Inc. (KDP) and Monster Beverage Corporation (MNST) are best avoided now.

Keurig Dr Pepper Inc. (KDP)

Plano, Tex.-based KDP is a beverage company that offers more than 125 hot and cold beverages. The company operates through Coffee Systems; Packaged Beverages; Beverage Concentrates; and Latin America Beverages segments. KDP’s brand portfolio includes CSD brands, which include Dr. Pepper, Canada Dry, Schweppes, Crush, Sunkist, A&W, 7UP, Sun Drop, Squirt, Big Red, Hawaiian Punch and RC Cola, and NCB brands.

KDP’s net sales increased 7.6% year-over-year to $3.25 billion in the third quarter, ended Sept. 30, 2021. However, the company’s interest expense was $116 million. Its cash and cash equivalents decreased 16.7% to $200 million for the nine months ended Sept.30, 2021.

KDP’s POWR Ratings are consistent with this bleak outlook. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. The stock has a C grade for Value and Growth. We have also graded KDP for Quality, Sentiment, Momentum, and Stability. Click here to access all KDP’s ratings. KDP is ranked #15 of 35 stocks in the B-rated Beverages industry.

Monster Beverage Corporation (MNST)

Incorporated in 1990, MNST in Corona, Calif., develops, markets, and distributes energy drink beverages and concentrates for energy drink beverages in the United States and internationally. The company operates through three segments – Monster Energy Drinks; Strategic Brands; and Other. The company offers carbonated and non-carbonated energy drinks, non-carbonated dairy-based coffee and energy drinks, non-carbonated energy teas and shakes, and ready-to-drink packaged energy drinks.

During the third quarter, ended Sept.30, 2021, MNST’s net sales increased 13.2% year-over-year to $1.41 billion. However, the company’s operating expenses grew 24% from the year-ago value to $344.69 million. Its operating income decreased 3.1% from the prior-year quarter to $444.46 million. Also, the company’s net income declined 3% year-over-year to $337.21 million.

Analysts expect MNST’s EPS to decrease 1.6% in the current quarter of its fiscal 2021.

MNST’s poor prospects are also apparent in its POWR Ratings. The stock has a D grade for Growth and Value. In addition to the POWR Rating grades I have just highlighted, one can see MNST’s ratings for Stability, Quality, Sentiment, and Momentum here. MNST is ranked #19 in the same industry.

Want More Great Investing Ideas?

Top 10 Stocks for 2022

3 Stocks to DOUBLE This Year

How to Trade Options with the POWR Ratings

9 “Must Own” Growth Stocks


KDP shares were unchanged in after-hours trading Thursday. Year-to-date, KDP has gained 1.55%, versus a -1.48% rise in the benchmark S&P 500 index during the same period.

About the Author: Priyanka Mandal

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
KDPGet RatingGet RatingGet Rating
MNSTGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com

:  |  News, Ratings, and Charts

Bulls in Charge…for Now at Least

Every since the S&P 500 (SPY) made new lows in mid June the bulls have been back in charge. At first it looked like your typical bear market rally. However, there are more and more signals going off that this may be the real deal. As in the new bull market may have arrived. That topic is a big deal as one's outlook, bullish or bearish, weighs heavily on how they construct their portfolio for the days and weeks ahead. That is why we will focus on that topic in today's commentary. Read on below for more…

:  |  News, Ratings, and Charts

The 3 Top Aerospace and Defense Stocks to Buy Now

The U.S. aerospace and defense industry is evolving, supported by lucrative fiscal investments and rapid defense technology advancement. Moreover, given the growing tension between China and Taiwan, it could be wise to add quality aerospace and defense stocks, Lockheed Martin (LMT), L3Harris Technologies (LHX), and Raytheon Technologies Corp. (RTX) to your portfolio now. Continue reading…

:  |  News, Ratings, and Charts

How to RIDE the Next Bull Market?

Growth stocks are back! And, they are leading the S&P 500 (SPY) higher after the brutal bear market investors experienced this year. Read on to find out the best strategy to profit from the next big bull market in growth stocks...

:  |  News, Ratings, and Charts

2 Momentum Stocks Crushing the Bear Market

Valero Energy (VLO) and Shell (SHEL) have maintained strong momentum amid the highly uncertain market conditions. With recession fears expected to keep the market under pressure in the near term, it could be wise to buy these stocks now to benefit from their momentum, which might continue for some time based on their fundamental strength irrespective of the market conditions. Read on…

:  |  News, Ratings, and Charts

How to RIDE the Next Bull Market?

Growth stocks are back! And, they are leading the S&P 500 (SPY) higher after the brutal bear market investors experienced this year. Read on to find out the best strategy to profit from the next big bull market in growth stocks...

Read More Stories

More Keurig Dr Pepper Inc. (KDP) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All KDP News