HANS Parabola

By Johns Wu on Jul 17, 2005

in 2004, if i had taken 100K and stashed it away in HANS, i would be a young millionaire right now. in the time span of about 1.5 year, the price of HANS stock skyrocketed from $10 to almost $100. however, the reason im talking about their stock today is to point out that the price of their stock is increasing at a an unsustainable parabolic rate.

parabolic stocks are pretty rare, especially when they can sustain themselves for years. nevertheless, im sure everyone has seen a parabolic stock before. you can see a ton of them in fact, if you look up all the tech companies that got hit in ~2000 when the dotcom bubble burst. i'm not going to bother posting graphs of companies hit during the dotcom bubble though, because those examples are simply TOO extreme.

instead, i invite you to look at this graph of EBAY in late 2004 when the stock exhibited parabolic growth. you can see the 4 consolidation bases referenced to in this site. briefly after the 4th base, EBAY announced 2005 growth projections that were not in line with the company's previous explosive expansion.

investors got nervous and the $60 pricetag on the stock became unsustainable because of EBAY's belief that their continued growth would be questionable in 2005. whats funny is that immediately after the news, a lot of analysts STILL reiterated their $65 target price for EBAY, trapping a lot of unsuspecting retail investors in the impending crash. thanks a lot, analysts. (what exactly are they paid to do?)

now back to hansen's… hansen's is a great company. i really like their drinks and i like how they've diversified and expanded their product pipeline. im not saying that HANS is going to suddenly crash, because i'm not qualified to make such bold statements (dont take investment advice from a college kid). also, i can't really imagine HANS tumbling down that drastically since the company isn't over-hyped by the media the same way that techs were hyped in 2000. perhaps a noticable pullback followed by a prolonged period of consolidation? i dunno, but i'd definitely like your thoughts on what you think will happen.

what i want you to take away from this article is that stocks cannot continue to grow parabolically forever unless if they can continue to deliver exponentially better quarterly results every single quarter.

-JW

This entry was posted on Sunday, July 17th, 2005 at 11:47 am and is filed under Market Editorials. You can leave a response, or trackback from your own site.

3 Responses to “HANS Parabola”

By Justin on July 19th, 2005 at 1:20 am

thanks for pointing this out, i think $100 might be a significant mental barrier, but i’m not a TA guy at all, and from a fundamental perspective this stock price is very very tenous. Even at next years earnings it’s still trading at over 30 PE. They only have 16 million in net assets, and are at a market cap over 1 billion… it has a market cap twice that of COKE.. which is just insane considering i’ve never heard of any of hansen’s beverages… anyway, thanks for pointing this out. I will probably be shorting it soon at any sign of weakness. Also I saw that it peaked at 100 recently, and opened at 102 and closed at near 100. Also they will soon have a 2:1 stock split that will make shorting easier, and a decline more likely. Options could be very lucrative on this as well. Once again, thanks….

By Anonymous on July 19th, 2005 at 8:49 pm

Please get your facts straight. Coke’s market cap is over $100 billion…not half of $1 billion as you state.

You talk about a “fundamental perspective” but your comments show you don’t know much about fundamentals. A forward p/e of 30 for a growth stock is not unusual. You also disparage the stock price because you’ve never heard of the company. Once again, this is a growth stock which means that it’s a good thing it isn’t available in many areas yet. If coke gained an extra 1% of the market share, it’s stock price would barely budge. If hansens gained an extra 1% of market share, it’s stock would triple. If you don’t understand these concepts, you don’t understand fundamentals.

I suggest you learn a little more about investing before you go shorting stocks. Hansens is one of the more fundamentally sound companies out there. That doesn’t necessarily mean it will keep up in price, but the worst thing to do is say nothing more than “wow, it’s gone up so fast it must come down”.

By Justin on July 20th, 2005 at 12:55 pm

and that’s why it dropped 15% in mintues today… bc it’s such a sound company….

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B63BDE761%2D7E99%2D4EED%2D8B44%2D584CC42DE6E2%7D

and i wasn’t wrong about COKE..
http://finance.yahoo.com/q?s=coke

but i did select the wrong company… not the real coke, i got the bottling group… but after looking at their balance sheet, they only have 12 billion in assets… 11 billion after the goodwill assets.. unless you’re talking about an all stock deal it’s not happening… 1/12 of net assets for this yes, i still say, relatively unknown company. The market cap is out rageous….

and anyway, why are you talking trash on here.. i doubt many people read this, but you sure took the time to vehemently dispell any of my comments….

are you nervous my friend???

and you guys on here are incredible… you are all right on the money with your reccommendatations i must say…

thanks for the resource