Editor’s Note: I’ve been known to frequent convenience stores, usually to pick up a cold soda after exercising. While standing in line to check out, I’m almost always behind someone buying a so-called “energy drink” that contains loads of caffeine and other stimulants.

I don’t consume energy drinks, mainly because I don’t need to. I exercise regularly, get plenty of sleep, and don’t have much stress in my life. But that isn’t true for the millions of people who for one reason or another need a jolt of energy to get through the day.

For them, a hot cup of joe isn’t enough. Instead, they guzzle down a can of instant energy on their way to work, ready to take on the day while I shuffle out the door with my Diet Coke and bag of corn nuts.

Unintended Consequences

A few days ago, a reader asked: “What groups of stocks are likely to rise and fall with the new Trump administration coming into power soon?” The president-elect has vowed to retool the U.S. economy through deregulation, import tariffs, and tax cuts that could hurt some sectors of the economy while helping others.

I responded, “The fact of the matter is that it is difficult to anticipate what groups of stocks will rise and fall under any presidential administration.” I cited the 150 percent total return of the Energy Select S&P 500 SPDR Fund (XLE) since Biden took office in January 2021 as an example of reality trumping theory.

You can argue Biden does not deserve credit for that since he is a clean energy proponent. Oil prices shot up after Russia invaded Ukraine two years ago. But neither Biden nor Trump deserved the pandemic, either. The global macroeconomic environment is constantly shifting due to forces beyond any one person’s control.

There will be similar unexpected twists during Trump’s next term as president. Some of his proposed cabinet picks already have Wall Street wondering which way the financial dominoes are going to fall.

In particular, Trump’s nomination of Robert F. Kennedy Jr. as head of the Department of Health and Human Services could cause many stocks to rise and fall if he is confirmed. Kennedy is a well-known anti-vaxxer and espouses controversial views regarding food and medicine that are contrary to conventional wisdom.

That does not necessarily mean his opinions are incorrect. But it does mean some of his decisions may catch Wall Street by surprise. Last week, I issued a trade alert for one high energy drink manufacturer that I believe may be in for a tough time soon, especially if Kennedy’s nomination is approved.

Recipe for Disaster

You don’t have to do much research to find out how the medical community feels about high energy drinks. According to the Cleveland Clinic, “the benefit claims of these mega caffeine-laden and sugar-fueled drinks may not be worth the boost. In fact, they can even pose some serious health risks if you’re not careful.”

That report notes, “Besides tons of caffeine, energy drinks also contain a powerful concoction of other ingredients like taurine, an amino acid, and herbal extracts like ginseng and guarana.” Although it concedes “these ingredients may have some health benefits,” it also cautions, “when you combine them with the additional caffeine and added sugars in an energy drink, it can be a recipe for disaster.”

That recipe includes being put at heightened risk for anxiety, depression, hallucinations, nausea, and strokes. If that isn’t enough to get your attention, other possible side effects are diarrhea, rapid heart rate, and obesity. The report also opines high-energy drinks “may not be a smart choice for people with diabetes.” As my father liked to say, that comment may qualify for the understatement of the year award.

Break Out the Trail Mix

That could be bad news for high-energy drink producer Monster Beverage (NSDQ: MN). According to Statista, Monster was the second-largest seller of high-energy drinks in the United States last year. Its 29.7 percent market share trailed privately held Red Bull by roughly ten percentage points.

Sales of energy drinks accelerated during the coronavirus pandemic. In 2017, all energy drink sales in the United States totaled $11 billion. By 2023, they had increased to more than $18 billion. For many people, energy drinks were the antidote to exhaustion caused by the stress of the pandemic.

Although COVID-19 remains, the pandemic is over. That is one reason why Monster’s fiscal 2023 third quarter sales were only 1.3 percent higher than the year before. Another reason is increasing competition from soda, tea, and coffee manufacturers offering high energy versions of their products.

Nevertheless, MNST rose 30 percent since the company released its Q2 results three months ago. At a recent share price of $53, Monster is valued at 33 times trailing 12-month earnings compared to a multiple of 30 for the S&P 500 Index. Also, its PEG (price/earnings-to-growth) ratio of 1.8 is nearly twice the 1.0 threshold that legendary mutual fund manager Peter Lynch felt was a fair price to pay for a growth stock.

To my way of thinking, Monster Beverage is an example of a business that may encounter stiff headwinds after Trump is in office. Its share price has gained no ground during the past year, and the next year could be even tougher if RFK jr. has his way. For MNST shareholders, there really may be a monster in the closet this time.

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