Conclusion, Investment Implications, Strategy

Monster Beverage Corporation (MNST)  is amid favorable conditions to resume its May 2020 Strategic advance from major underlying support near $89.08, which is currently being tested.  A sustained rise above this area would target an additional 11% rise to $103.00 per share.  This is an Asbury Value trade idea.

Analysis and Rationale

Monster Beverage Corporation (MNST), through its subsidiaries, develops, markets, sells, and distributes energy drink beverages and concentrates in the United States and internationally. It operates through three segments: Monster Energy Drinks, Strategic Brands, and Other. The company offers carbonated energy drinks, non-carbonated dairy based coffee and energy drinks, non-carbonated energy teas and shakes, non-carbonated energy drinks, and ready-to-drink packaged energy drinks primarily to bottlers and beverage distributors, as well as sells directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers, and the military; and concentrates and/or beverage bases to bottling and canning operations.  The company was formerly known as Hansen Natural Corporation and changed its name to Monster Beverage Corporation in January 2012. Monster Beverage Corporation was incorporated in 1990 and is headquartered in Corona, California.

The rightmost green highlights in Chart 1 below show that MNST is currently rebounding from a Jun 25th test of its 200-day moving average, a widely-watched major trend proxy currently at $89.08 (upper panel) while rebounding from monthly (our Tactical time period) oversold extremes (lower panel).  The other green highlights show that similar conditions closely coincided with Tactical bottoms in early May and in early March.  These conditions set up a low-risk opportunity to buy an uptrending stock in a potentially low-risk/high reward environment just above major support.  If the current major uptrend in MNST is still valid, this is where it should resume.

Chart 1

A sustained rise above the $89.08 area would indicate this is indeed the case and target an additional 11% rise to $103.00 per share. 

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $89.47 area, a long entry price of $92.84 would provide a 1:3.0 risk/reward ratio (risking $1.00 to make $3.00) with an initial risk of 3.6%.

Table 1

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Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.