Taking A Look At Quarters for CELH, MNDY, and SNPS

Finally getting close to the end for earnings season updates! In this write-up, we'll briefly review the quarters for 3 Watch List stocks: Celsius Holdings, Monday.com, and Synopsys.

Celsius Holdings (CELH)

Kinda kicking myself for not going ahead and adding Celsius as a "buy" when we first reviewed it and it was down in the $80's. Since then, the stock has more than doubled and now trades over $180 after a blowout Q2 report. C'est la vie... we won't get them all.

Revenue soared 112% in the quarter, including an impressive 114% in North America. The company credited expanded availability and increased consumer awareness, which frankly go hand-in-hand and are direct effects of the Pepsi distribution deal. Celsius gained a ton of market share, doubling its share of the U.S. energy drink market up to 8.6%. The brand is unquestionably "firing on all cylinders" right now.

Equally impressive is Celsius' gross margin expansion, which grew to 48.8% in the quarter, vs. 38.5% last year. A key piece of the investment thesis is the firm using the distribution deal to approach Monster Energy-like 60% gross margins. It was very encouraging to see the continued rapid progress towards that goal.

Needless to say, these results were super impressive and beyond even my modeling. Incorporating an increased growth rate and reducing the discount a bit, a substantial increase in the fair value price is warranted. I'm raising it to $156 from a previous $122.

Monday.com (MNDY)

Recent Watch List addition Monday.com had a nice Q2, reporting a 42% increase in year-over-year revenue. Importantly, large customers (over $50k in annual recurring revenue) grew much faster than that, increasing 63% to 1,892. I always favor SaaS firms that target large clients, as those clients are generally stickier and more likely to expand spend than smaller customers.

We continue to see strong product development as well, with the release of mondayDB 1.0, a new underlying platform for the firm's core WorkOS offering. It also launched several AI-based capabilities it can use both as a marketing advantage, and to maintain technological parity with competitors.

Monday's quarter was right about in line with our modeling. The fair value price gets a small, time-based bump up to $185 from a previous $182.

Synopsys (SNPS)

Semiconductor design software and IP provider Synopsys continues to plug along with a strong Q2 report. Quarterly revenue was up 19% year-over-year, above expectations. The company continues to see strong semi design starts and R&D investments, a further nod to the ever-increasing importance of chips to virtually every industry in the world. Management raised full year guidance to 14-15% revenue growth and 24-25% earnings growth.

The biggest piece of news out of the quarter was the announcement of new CEO Sassine Ghazi, who will assume leadership from company founder Aart de Geus at the start of 2024. Ghazi is a company man, 25 years with Synopsys, where he has worked his way up from application engineer to COO. It looks like a strong choice to take over the reigns. De Geus, a legend in the industry, will remain as more or less a company culture ambassador.

Big news, but nothing to really move the valuation model significantly. It gets a few dollar bump up to $290 from $286. Still, Synopsys' stock continues to look substantially overvalued to me, at present.