|Analysis of Celsius and Zenith's Engagement|
|By Vinny Cassano|
|Wednesday, 06 October 2010 00:00|
Monday was a ho-hum day for Celsius Holdings, a day that saw only a handful of shares trade hands, at least that's the way it was until just before three o'clock when a company press release hit the wires announcing an engagement with Zenith International to evaluate strategic options and avenues for growth.Zenith is a big time strategy consulting firm with a specialty in the food and beverage industry.
Once the announcement hit the wires, the same type of trading that has come to represent the norm over the past few weeks took place. It seems like every time we see a post-news volume and press spike it is met with selling to the downside, bringing the stock right back where it started the ho-hum day.
It was almost like big player(s) think its too soon to let the stock trade on its own accord, instead opting to sell some of their position against the volume. The quick move up, however, did offer an example of just how quick CELH can move when the right news hits, and I don't even think that the Zenith announcement is the "right" news. It'll be the fruits that are ripened by this engagement that product the "real" news, in my opinion.
And that brings us back to the news; a quick glance at the Zenith International website gives us an idea to just how big some of this company's clients are. Some big players for sure, and now Celsius is a part of the team.
So what does this mean for Celsius? Should we assume from this announcement that larger distributorship or strategic partnerships are going to materialize before our very eyes? Or is this a last ditch effort by the company to try and create something after seeing the product stutter-step to the mainstream?
For starters, this sentance from the press release drew my attention:
"With Celsius' unique MetaPlus™ technology, its multi-year investment in clinical studies that substantiate its claims, its proven ability to innovate, and widespread distribution in major retailers, it is well positioned for growth."
Specifically, these words: "its multi-year investment in clinical studies that substantiate its claims."
Ordinarily, there wouldn't be anything special about mentioning these studies again, but when you consider the 8-K filing by the company last week, I'm inclined to believe that Zenith was covering all bases before taking Celsius on as a client. The disclosure ofthe NAD's determination that Celsius could substantiate its advertising claims was icing on the cake.
It's also worth remembering that CEO Steve Haley recently mentioned some pullbacks in staff and advertising, and that move could also be related to whatever Zenith has in mind for Celsius. An addition of a strategic partner would take some of the advertising and distribution work out of the hands of Celsius.
It's been a rough year for shareholders of CELH, and there's little doubt in anyone's mind that the stock was being played, with hoardes of keyboarders dispatched to cyberspace for thousands of hours at a time to create an aura of fear, panic and despair around Celsius Holdings and its stock. The successful attack has opened up a great buying opportunity for all investors - large and small - and many of the small ones are chipping away at accumulation.
The company has been relatively quiet over the past months, issuing a PR here and there, and while the Zenith announcement is not the big news that shareholders need to regain full confidence in the company - it could be a clue that bigger things are coming.
Celsius was doing just fine without Zenith (this would have been confirmed with another solid quarterly result in November), but the prospects for Celsius just got substantially bigger.
There's no guarantee that Celsius will ever become mainstream - there's never guarantees in the market - but the market is trending towards healthier beverages that promote a healthy lifestyle and exercise, and Celsius could be positioned to take full advantage of that trend.
Patience is a virtue, and those that have been patient with Celsius may soon get their payoff - again.
It's getting interesting.
Disclosure: Long CELH.
Vinny also authors the popular stock investing blog VFC's Stock House.