Celsius Holdings (CELH) presents a high-conviction contrarian opportunity as the stock trades near year-to-date lows despite projected 40% revenue growth and elite 51% gross margins. Investors should view the current price near $33 as a "dirt cheap" entry point for a brand that is successfully replacing coffee for Gen Z and outperforming legacy competitors like Monster (MNST). Similarly, On Holding AG (ONON) is a "pure play" growth trade, with revenue tripling since its IPO while the stock price remains stagnant, offering a rare 63% gross margin in the apparel sector. Both companies currently pass the "Rule of 40" gold standard, indicating they are efficiently scaling while taking significant market share from incumbents like Nike. Focus on these two names as they trade at a significant valuation discount relative to their "cash-printing" business fundamentals and high consumer demand.

Celsius Holdings, Inc. (CELH)

The speaker characterizes Celsius as a "dirt cheap" growth stock that is being unfairly ignored by Wall Street. Despite the stock being down nearly 50% over the past six months and trading near its year-to-date lows ($33), the underlying business fundamentals and consumer adoption remain exceptionally strong.

• Strategic Acquisition: The speaker highlights the acquisition of Alani Nu as a major catalyst. Previously a competitor, Alani Nu now complements Celsius, creating a powerhouse in the "clean" energy category.
• Financial Strength:
  • Revenue Growth: Predicted to grow sales by 40% over the next 12 months.
  • Margins: Boasts an excellent 51% gross margin and a 23% EBITDA margin.
  • Valuation: The speaker cites an EV/GP/Revenue Growth metric of 0.17, suggesting the stock is significantly undervalued relative to its growth.
  • Rule of 40: Currently sits at 63, indicating high efficiency and growth.
• Market Positioning:
  • Unlike Monster or Red Bull, Celsius is "socially acceptable" to consume in the morning, competing directly with coffee among Gen Z consumers.
  • The brand has a strong "health" positioning and is becoming a status symbol.
• Risk Mitigation: The speaker dismisses "dupes" (store-brand copycats from Costco or Aldi) as insignificant "breadcrumbs" that won't hurt the main brand's status.

Takeaways

• Contrarian Opportunity: The disconnect between the "stellar" growth curve and the flat/declining stock price presents a potential entry point for long-term investors.
• Recession-Proof Qualities: At roughly $15–$18 for a 24-pack at warehouse clubs, the product is viewed as an affordable luxury that consumers are unlikely to cut during a downturn.
• Historical Precedent: Celsius has outperformed Monster (MNST) significantly over the last six years (62% annualized return vs. 15% for Monster), suggesting it is the current leader in the high-growth beverage category.

On Holding AG (ONON)

The speaker views On Running as a "pure play" on the decline of Nike, noting that the stock is trading near its IPO price despite revenue tripling since that time.

• Consistent Growth: Revenue is 3x higher than at the time of IPO, with extremely consistent sales growth quarter-over-quarter.
• Financial Metrics:
  • Gross Margin: Outstanding at 63%, which is rare for a physical goods/apparel company.
  • Rule of 40: Currently at 41.
  • Valuation: EV/GP/RG is 0.18, which the speaker labels as "cheap growth."
• Leadership Changes: The speaker is bullish on the founders returning to lead the company following the CEO's sabbatical, viewing "founder-led" as a positive signal rather than a risk.
• Product as "Consumable": High-end running shoes are treated as recurring revenue because they wear out and require replacement (typically a $160 purchase annually per customer).

Takeaways

• Market Share Grab: On is successfully taking market share from legacy players like Nike.
• Pure Play Advantage: Unlike Hoka (which is owned by Deckers Outdoor Corp), On is a pure play, allowing investors to target the premium running shoe trend directly.
• Marketing as Investment: High marketing spend is viewed as a positive "investment" in brand equity that leads to high-margin repeat purchases.

Investment Themes & Sectors

Consumer Discretionary / "Trendy" Retail

• The "Real World" Indicator: The speaker emphasizes observing products in the "real world" (airports, gas stations, gyms) as a primary research tool.
• Gen Z Preferences: A shift is occurring where younger consumers are replacing traditional coffee with functional, "healthy" energy drinks (Celsius/Alani Nu).

Valuation Discrepancy

• The "Flat Stock/Rising Revenue" Phenomenon: Both featured stocks have seen their underlying business value grow (3x revenue for ONON; massive growth for CELH) while their stock prices have remained stagnant or declined.
• Wall Street Misunderstanding: The speaker suggests Wall Street is overreacting to short-term headlines (lawsuits, CEO changes, or Middle East tensions) while ignoring the "cash-printing" nature of these businesses.

Key Metrics Mentioned

• EV/GP/RG (Enterprise Value / Gross Profit / Revenue Growth): Used by the speaker to identify "cheap growth." Both stocks are trading below 0.20 on this metric, while the speaker notes many other stocks trade at 1.0 to 1.5.
• Rule of 40: A benchmark where a company's combined growth rate and profit margin should exceed 40%. Both companies currently pass this "gold standard" for growth businesses.