Author: Gerry Sparrow, Sparrow Capital
Covestor models: Fundamental Growth and Hard and Soft Commodities
Disclosures: Long HANS
Hansen Natural Corporation (Nasdaq: HANS) was purchased in the Fundamental Growth model on August 25, 2011.
Hansen Natural Corporation (Hansen) is a holding company. Hansen develops, markets, sells and distributes alternative beverages. The Company’s category beverages brand names include Monster Energy, Java Monster, Monster Energy Extra Strength Nitrous Technology, Monster Rehab, Peace Tea, Hansen’s, Hansen’s Natural Sodas, Junior Juice, Blue Sky, X-Presso Monster, Vidration, Worx Energy, Admiral, Lost Energy, Hubert’s, Rumba, Samba and Tango.
It has two segments: Direct Store Delivery (DSD), whose principal products consists of primarily energy drinks, and Warehouse, whose principal products consists of juice based and soda beverages. In February 2010, Hansen introduced the Fruit and Tea Stix product line.
In March 2010, it launched Blue Sky Shots, natural functional shots, and introduced Admiral Iced Teas. In August 2010, the Company introduced Hubert’s Lemonade. In September 2010, the Company introduced a Blue Sky Free Blue Energy drink.
Our investment philosophy and process screens businesses that have consistent or accelerating sales, earnings and cash flows. And Hanson Natural has all of them.
Technically speaking, these profit margins are why we like this company. Key stats and ratios Q2 2011, 2010 – source data from Google Finance, retrieved 9/1/11 (http://www.google.com/finance?q=NASDAQ:HANS&fstype=ii):
Net profit margin: 18.23%, 16.26%
Operating margin: 28.67%, 26.62%
Return on average assets: 28.57%, 22.53%
Return on average equity: 37.47%, 30.00%
We’d say it doesn’t get any better than this. To learn more about this business check out their website (hansens.com).