We’ve been keeping our eye on Celsius (CELH) for a couple of months now, which, frankly, has been a mistake — we should have nibbled on it, as shares have done pretty well, suggests Mike Cintolo, editor of Cabot Growth Investor.

Even so, we think there could be plenty more upside ahead, with any weakness potentially setting up a good entry point going ahead. To recap, the company looks like the next big winner in the energy drink market.

First was Red Bull, then Monster (MNST), now Celsius — and that’s because it offers something different, with independent studies showing its unique formula actually boosting metabolism, and it doesn’t hurt that the drinks are healthy otherwise, too (no preservatives, aspartame, added sodium, etc.).

Celsius has just 4%-ish of the market, a figure that’s growing quickly thanks to major distribution expansions (Sam’s Club, Walmart, Lifetime Fitness). And now something even bigger has happened.

Behemoth Pepsi (PEP) has struck a long-term distribution deal with the company, which will obviously open up tons more shelf space (both in existing locations and new doors), and Pepsi also took an effective 8.5% stake in CELH (via a $550 million purchase of convertible preferred stock).

Growth was already fantastic (sales up 137% and earnings of 12 cents per share in the just-reported Q2), and while it will take some time to ramp up, there’s little doubt the Pepsi deal is going to supercharge results going forward.

The stock lifted above some resistance in early July, pushed higher for a few weeks and then gapped toward its old highs on the Pepsi news; it’s since chopped around, with some selling after the good news but then support after earnings.

After a big run from its lows and with the market environment still so-so, the recent rest period could certainly go on for a bit, allowing the moving averages to catch up.

But bigger picture, the stock’s deep correction, multi-month low area and recent strength — as well as the sterling fundamental prospects — make us think CELH best days are ahead of it. Our eyes are peeled for an entry point.

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