Hansen Natural (HANS) hits a double bottom

Hansen Natural Corporation  (Public, NASDAQ:HANS),  reports earnings this Thursday, November 6th.

The stock recently hit a double bottom - a major reversal pattern that forms after an extended downtrend. As its name implies, the pattern is made up of two consecutive troughs that are roughly equal, with a reasonable peak in-between.

The classic double bottom usually marks an intermediate or long-term change in trend. In spite of that, we aren’t 100% believers in technical charting here at the Stockmasters. Charts don’t always pan out. Let’s take a look at fundamentals and their earnings forecast and try to determine whether HANS is worth a buy, or if it would be better to wait until after the earnings call to pick some up at bargain prices.

On 8/7/2008, HANS reported 2nd quarter 2008 earnings of $0.51 per share. This result was in-line with the consensus of the 8 analysts following the company and beat last year's 2nd quarter results by 8.5%.

HANS's PE ratio is currently below the Nonalcoholic Beverages industry average, which is a sign that investors are not willing to pay a premium for the stock. The state of the economy has discounted the stock price severely, even with its fundamentally sound balance sheet.

The main thing that peaks my interest in Hansen is their recent distribution deal with Coca-Cola.  The deal with Coca-Cola and its largest bottler is to distribute Monster energy drinks in parts of the United States, in Canada and in six Western European countries. The strength of Coca-Cola's bottler network is good news for Monster's global prospects, and while the deal doesn’t mean that Coca-Cola is going to buy out Hansen, it could be the first step in that direction. If the distribution goes well or exceeds expectation, what’s going to stop the #1 Soft Drink maker from buying them out?

So join the Hippie bandwagon and pick up some all natural HANS.

I personally think the company is going to have a tough time meeting or beating earnings of .53 for Q3. If you decide to pick up shares before the earnings call on Thursday, put in a stop/limit order just in case. If shares fall lower after the call, it’s definitely time to start accumulating.