In a comparison between Monster Beverage and Intuitive Surgical, it is suggested that Monster Beverage is currently a better pick for investment. Despite being from different sectors, both companies share a similar revenue base of around $7 billion and a similar operating income of just under $2 billion. While Intuitive Surgical has seen better revenue growth, Monster Beverage is more profitable. Factors such as historical revenue growth, returns, and valuation are taken into consideration in making this determination.
Over the past three years, Monster Beverage stock has outperformed Intuitive Surgical stock, with Monster Beverage seeing gains of 100% compared to 60% for Intuitive Surgical. While the stock prices have not been consistent, with fluctuations in returns over the years, both companies have shown positive growth. Despite challenges in beating the S&P 500 index in recent years, the Trefis High Quality Portfolio, consisting of 30 stocks, has consistently outperformed the index. With the current uncertain macroeconomic environment, both stocks are expected to trend higher, but Monster Beverage is predicted to outperform Intuitive Surgical.
Intuitive Surgical has shown better revenue growth than Monster Beverage, with an average annual growth rate of 18% compared to 16% for Monster Beverage. Intuitive Surgical’s revenue growth has been driven by an increase in procedure volume, while Monster Beverage has seen growth due to demand for its energy drinks, new product launches, and expansion in international markets. Looking ahead, Intuitive Surgical is expected to see revenue growth at a rate of 9%, while Monster Beverage is predicted to have a 7% growth rate in the next three years.
In terms of profitability, Monster Beverage has a higher operating margin than Intuitive Surgical. Both companies are debt-free and have similar cash reserves, indicating a solid financial position. Despite the differences in revenue growth and profitability, it is believed that Monster Beverage is the better choice of the two companies. Valuation multiples have increased for both stocks, with Intuitive Surgical trading at 22x trailing revenues and Monster Beverage trading at 7x revenues. Despite a positive outlook for both companies, Monster Beverage is expected to fare better due to recent pricing actions and cost-cutting efforts, as well as a strong demand for energy drinks.
While Intuitive Surgical will benefit from its new platform and expansion of its installed base, it is believed that the positives are already priced in for the company after a 30% rally in its stock price this year. On the other hand, despite efforts to improve margins, Monster Beverage’s stock is down 15%, presenting a potential opportunity for investors. Overall, it is suggested that while Monster Beverage may outperform Intuitive Surgical in the next three years, it is important to consider how Intuitive Surgical’s peers are performing to gain a better understanding of the industry landscape.
