Hansen Natural Corp (HANS)

Har1en (21.60) Submitted: 8/18/06 8:36 PM : Start Price: $30.25 HANS Score: -11.08

Hansen is on fire. As of this writing, Hansen has dropped from a PE of about 65 to 35, after posting quarterly earnings growth in the 85% range. This company has several things going for it. Youth are trending away from Pepsi and Coke toward 'authentic' drinks. The folks running the Monster product line have done a tremendous marketing job associating Monster with extreme sports and have created a product that has the pricing power of Starbucks coffee without the need for expensive real estate. Recently, HANS announced a logistical distribution relationship with BUD. I believe investors hoped for some results from this partnership to boost this last quarter's numbers, but the development of the logistical change is slower than they anticipated. Right now, we have a great stock with tremendous potential, a righteous management team, held back by a reaction against overzealous investor sentiment that just got reality handed to them. This stock should come back with a bang within a year. The real question here is how large Monster can become, and whether they can retain their margins for the energy drinks. So long as pricing power stays strong and growth continues, an investment in this could easily double within two years.

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