An Analysis of HANS and DPS before Earnings Reports
1) HANS: Varchild raises Buy rating to Super Strong OMG buy rating.
I don't care about the P/E ratio.. HANS below $30 is a steal. This company has tons of cash available to expand their beverage catalog in the near future and they are growing the size of areas for selling their drinks.
I still say that I do not like a 1-hit wonder stock like HANS cause as soon as people start looking for the next best thing, the sales of the 1-hit wonder take a plunge. Let's face it.. Whether it is distribution problems or consumer spending / economic issues, Monster energy drink and its variants did not do so well in Q2.
But, what else happened in Q2? Oil prices went up... Input costs skyrocketed. Guess what? HANS's future is now the following:
1: It's July so OIL prices as Varchild predicted are falling in Q3.
2: Distribution issues in Q2 should be ironed out by now.
3: There is nothing stopping HANS from taking a QUE with DPS in incorporating cost saving measures for distributing beverages. DPS has incorporated a GXS price & promotion system. HANS could easily step in and join DPS in becoming another GXS customer.....Get those costs reduced and get your promotions out in quick fashion.
In short... The cheaper HANS gets... the more it's worth buying.
2: DPS Take EPS of $1.72 and multiply it by a 17 P/E. Why? Pepsi trades at 17.7 P/E.
With several earnings beats under its belt, sooner rather than later, DPS will become a momentum stock that will trade in comparison to the same P/E Multiple as KO and PEP.
Even if it trades 1 or 2 P/E below.... We are looking at a $29 stock. Not a $22 stock.
So? Keep piling in and buying this one straight through the earnings report. I stocked up on this one big time in Q2 raising my stake overall to 476. That's over $10 grand!
I think you can trust me on this.. The beverage sector is going to be exciting now that OIL prices are set to plunge 10-15%.... back in the $50s again.
The aforementioned cost cutting moves DPS is doing are absolutely sensational. They increase the pace at which DPS's debt is paid down. DPS doesn't have the inventory, distribution problems that HANS's growing pains have... and so there is definitely some wiggle room to argue in favor of DPS versus HANS... And if HANS is trading at $29+ then DPS deserves to at least Market Perform along with HANS for a bit....if not outperform.
My latest trip to MEIJER store showed me that there were ZERO in stock Diet Dr. Pepper 2-liters.
Diet Dr. Pepper's sales have gone up huge in Q2 and now it looks like that will carry over into Q3.
Q4 = Winter months for the Midwest States and Beverages sales are challenged. But, the share price shouldn't be for DPS or HANS.