A few days ago, Hansen Natural (HANS) took an 11% hit in the stock price. I was floored. I was hoping that the price would initially pull back a little, but it easily passed through my limit price and down another 9%. Ugh!
So I immediately checked the news for anything, anything at all. What I found was an analyst’s reaction to the shareholder meeting.
I was both confused and happy. Confused that an analyst would drop estimates based on what appeared to be an incredible lack of substantive or, at least, quantifiable information (or maybe he did channel checks, got insider info, etc.). Hansen’s CEO said that sales were disappointing in the last two weeks of May. What the news services did not report was that sales were still ahead of last year. Couple that with commentary that Hansen’s Monster brand is continuing to take market share away from competitors. Add on that the energy category, when including all sub categories, is actually growing. The offset is that it’s core customer, blue collar workers, are having a hard time in this economy. But I think this is somewhat mitigated by: 1) a smaller, more affordable can that’s been selling very well, and 2) the potential from international expansion, which my wife says is a VERY smart move.
I was happy because it represented an opportunity to invest. I revisited my cash flow models and realized that my growth assumptions were still lower than Wall Street’s. Hansen’s stays on top of its distribution channel (its business) and the CEO is the one who fields most of the questions on the business (rather than the COO or CFO). As an analyst, I love to see these (among other things, of course).
So I could be dead wrong. Stock could go down another 10+%. But I really believe that this company is solid for the mid-term, at least: tight balance sheet, dreamy cash flows and growing market share. To this last point, I have some buddies in the extreme sports racket, who tell me that Monster is a well-respected brand among the fans and athletes. That’s perfect for street cred. Btw – I bought more of HANS after it flew through my limit price.
