Earnings Watch: Celsius Holdings Print E-mail
By Vinny Cassano   
Monday, 08 November 2010 00:00

With Celsius Holdings set to announced results for the third quarter on Tuesday.

I feel CELH will be a stock to watch for the coming week as investors will be looking for a continued growth trend that replicates, or comes close to the solid numbers reported for the second quarter which saw year-over-year numbers increase by 252% and quarter-over-quarter numbers increase to $4.1 million from just $2.3 million the quarter before.

The company's full year estimates, although having been modified lower a couple of times, call for $15-$18 million in total 2010 sales. Third and fourth quarter numbers in the range of five to five and a half million per would put Celsius in line to reach those expectations.  However, with reinvigorated growth into relevant sectors and two new flavors now on the market, expectations may be higher by year's end.

The most recent news releases regarding the potential in growth and distribution will not be realized until we see numbers for the fourth quarter, but there's been enough progress made into the military exchange market and bulk distribution channels to support steady third quarter growth, in my opinion, especially if re-orders from existing outlets continue to increase at the rate demonstrated throughout the year thus far.

Volume for the CELH stock has been on a steady increase over the past couple of weeks, and aside from a nearly comical 500-share day, it could be argued that some increased interest and/or short covering has been taking place in preparation for the upcoming earnings release.

Also of extreme interest, the ticker symbol for the Celsius warrants (CELHW) traded nearly forty thousand shares on Friday, a huge number for the normally very lightly traded warrants. A 37% increase accompanied the CELHW volume spike, on the heels of another day earlier in the week that saw 3,333 warrant shares trade hands.

Any results that come in below expectations could allow the shorts another ample opportunity to push the stock downward, but the increase in warrant volume could also indicate that those with a long time negative view of this company may be feeling the need to take up a protective long position on the other side of the fence just in case the numbers indicate strength - hence the large purchase of CELHW, which took place below the radar.

For those that are the long term believers in the potential of the Celsius calorie-burning product, the prices below $1.50 have offered up a solid buying opportunity. The naysayers that believe Celsius is competing against other energy drinks and not functional, healthy beverages, will still believe that this stock has a lot of potential downside.

Tuesday will be a day of insight, to see if the product is catching on and whether or not we're to believe that cash-flow-positive is just around the quarter, as has been alluded to by CEO Steve Haley at numerous points throughout the year.

Keep an eye towards the results - increased volume and the pending earnings day make CELH a stock to watch.

Disclosure: Long CELH




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