7/26/2007

THE JOURNAL REPORT: BEST ON THE STREET

Beverages

By BETSY MCKAY

Notable Pick: BUY - Hansen Natural (HANS)

Much of the fizz in the beverage industry these days isn't in iconic brands, but in drinks with names like Monster.

Alton Stump earned the No. 1 spot among beverage analysts with some prescient picks on the small but rapidly growing makers of such brands. An analyst at Longbow Research, an independent stock research firm in Independence, Ohio, he had a buy rating all year on Hansen Natural Corp., the Corona, Calif., maker of Monster Energy drinks, natural sodas and other beverages. That earned him a return of nearly 71%.

About two-thirds of Hansen's revenue in 2006 came from energy drinks, Mr. Stump says, which, unlike most sodas, are seeing rapid sales growth and are highly profitable. Hansen also is his top pick for 2007, because he sees strong growth continuing for Monster Energy. Hansen is expanding distribution and raising prices, he says.

Mr. Stump, who declined to disclose his age, doesn't follow the biggest nonalcoholic-beverage companies: Coca-Cola Co. and PepsiCo Inc. But he does have ratings on their big U.S. bottlers because his firm conducts regular surveys of sales in convenience stores, where bottlers derive a large portion of their profits. He scored an 11% return with a buy rating on Pepsi Bottling Group Inc. for most of last year.