The stock market has been volatile in recent months, with many growth stocks experiencing significant declines. One such stock that has caught the attention of investors is Celsius Holdings (CELH), the maker of healthier sugar-free energy drinks. Shares of CELH have plummeted 70% from their all-time highs, presenting an opportunity for patient investors. But is this growth stock a buy right now?

Celsius Holdings has faced several challenges in recent months that have contributed to its stock price decline. The company's revenue growth trajectory has significantly slowed in 2024, with successive quarters showing decelerating growth, culminating in a 31% year-over-year decline last quarter. This slowdown, coupled with a high price-to-earnings ratio (P/E) of over 100 earlier in the year, contributed to the stock's decline.



However, the revenue drop is not as severe as it seems. The company's largest distribution partner, PepsiCo, trimmed its inventory levels for Celsius, resulting in a temporary hit to the company's revenue. Additionally, the company's market share stagnation and increasing competition from upstart brands like Alani Nu and Ghost have also played a role in the stock's decline.

Despite these challenges, Celsius' long-term growth prospects remain intact. The company's international expansion, category tailwinds, and pricing power are expected to drive 10% annual revenue growth over the next five years. Assuming similar profit margins to Monster Beverage, Celsius could generate $550 million in annual earnings in five years, bringing its P/E down to 12.4 compared to its current market cap of $6.8 billion.



In addition to its long-term growth prospects, Celsius Holdings also offers an attractive valuation. The company's current P/E ratio of 12.4 is significantly lower than its historical average of over 100, indicating a more attractive valuation. Compared to its industry peers, Celsius' P/E ratio is also lower than the average P/E ratio of the S&P 500, which is currently 31. This suggests that the stock may be undervalued and could be a buy for those looking to hold for at least five years or longer.

In conclusion, Celsius Holdings is a growth stock that has faced several challenges in recent months, leading to a significant decline in its stock price. However, the company's long-term growth prospects and attractive valuation make it an attractive buy for patient investors. By 2029, Celsius could generate $2.2 billion in sales and $550 million in earnings, bringing its P/E ratio down to 12.4. For those willing to weather short-term volatility, Celsius Holdings could be a compelling long-term investment opportunity.