With a fivefold surge in its share price over the past year, Hansen Natural Corp. stock has this in common with a key male extreme-sports fan demographic: both are fueling themselves with Hansen’s fast-growing Monster energy drink.

Once a staid, family-owned business that sold fresh, non-pasteurized juices to Southern California film studios in the 1930s, Corona-based Hansen today is a thriving public company marketing everything from health-foody sodas and bottled juices to an expanding line of trendy, herb- and vitamin-infused caffeinated beverages.

The beverage industry’s energy drink category rose 70 percent nationally last year, with Monster sales up 100 percent, according to ACNielsen data. And even in established markets like Los Angeles, the company said sales were up 200 percent. Monster is now the top energy drink line in Southern California, Texas and Arizona, and second largest nationwide. Red Bull is No. 1.

Hansen’s energy drink line accounted for 77 percent of company sales and 95 percent of profits in fiscal 2005, with the balance of sales coming from natural-ingredient soft drinks, organic juices, smoothies and similar health-conscious beverages. All that growth pushed Hansen to the top spot on Forbes’ Best Small Companies list in 2005, from 56th place in 2004.

Still, the stock might be seen as growing too fast for its own good, at least on the surface. Even after a two-for-one split brought its price below $50 in August, strong earnings and announcements of lucrative partnerships have since pushed Hansen’s price to more than $186 as of May 17.

And as a stock that has appreciated 100-fold over the past three years, short interest (the number of shares held short by investor) is high, around 26 percent of its public float.

Its fans on Wall Street, however, point both to market trends and management’s savvy business model as arguments that the company is more than a flashy momentum play. While analysts following the company have tended to be from specialty firms, Goldman Sachs & Co. became intrigued enough to initiate coverage on May 10 with an “outperform” recommendation and $176 target share price. The stock closed that day at $201.06.

The day before, Hansen reported first-quarter earnings of 84 cents per share, ahead of the Wall Street consensus of 71 cents, and announced a breakthrough distribution deal with beverage giant Anheuser-Busch Cos. The agreement will more quickly get the distribution reach of four-year-old Monster on a par with Red Bull, which created the premium energy drink category in the late 1990s.

Monster has a similar nutritional profile to Red Bull, both using the same higher quality sweeteners glucose and sucrose that give it a quicker, more sustained kick than cheaper high fructose corn syrup used in some competing energy drinks and regular soft drinks. But Monster attempts to distinguish itself as a better value by offering more Vitamin C and B vitamins and by packaging itself in 16-ounce cans selling for around the same price as Red Bull’s slim 8-ounce can.

Among the few negatives that Longbow Research analyst Alton Stump could find with the most recent financial report was that the hit to earnings from new reporting requirements on stock option expenses was higher than expected. In addition, increased operating costs slowed growth in gross margins slightly more than expected.

The Monster beverage line is now available around 70 percent at both U.S. grocery and convenience stories, up from respective 62 percent and 66 percent positions at the end of last year. Stump had forecast 90 percent penetration by the end of 2007, but believes the Anheuser-Busch deal moves up that goal by at least a couple of quarters. The company earlier this year signed a vender agreement to increase its presence in mass retailers and club stores, such as Wal-Mart and Sam’s Clubs.

“We believe that the company’s earnings growth potential, debt-free balance sheet and expanding free cash flow generation warrants a multiple well ahead of its peers,” said Stump, who maintained his “buy” recommendation on shares and raised share price target to $217.

Goldman Sachs analyst Andrew Sawyer sees the energy drink segment as driving as much as 30 percent of U.S. non-alcoholic beverage industry profit over the next five years, a market opportunity that has prompted Coca-Cola Co. and PepsiCo to launch their own labels. Sawyer notes that the energy drinks are showing a growth trajectory comparable to that of sports drinks and bottled tea and coffee in the 1990s.

In the 1970’s, the grandson of the company’s founder developed and marketed a variety of natural sodas and shelf-stable juices under the Hansen’s name. By 1992, a public shell company run by current Chairman and Chief Executive Rodney Sacks and Vice Chairman and Chief Financial Officer Hilton Schlosberg acquired the Hansen brands.

Sacks and Schlosberg implemented a low-capital business model that outsources production, research and development, and uses existing bottler networks for distribution. In addition, capital spending is less than 1 percent of revenues, compared to the 4-6 percent average of most beverage companies. The company reported long-term debt of only $8,000 as of the most recent quarter and free cash flow of $73 million at the end of 2005. Sawyer believes Hansen could generate another $105 million in free cash this year.

Given the stock appreciation and the fact that Sacks and Schlosberg own 42 percent of the company reducing the public float to 22.8 million shares it’s unlikely the cash will be used for stock buy back. Analysts such as Sawyer expect the company will use cash for acquisitions, but eventually may start paying dividends.

Not all analysts, though, believe there remains significant upside to the stock. “The cat is out of the bag,” said Canaccord Adams’ Scott Van Winkle, who has “hold” recommendation on shares and a greater concern than others about the company’s reliance on outsourcing, as well as the growing competition from Coke and Pepsi.

However, the company is known for innovation and has diversified beyond energy sodas, such as adding a caffeinated orange juice alternative for morning coffee addicts, and a version of Monster that is 70 percent juice. Any new hits would support analysts who believe there is more growth in the stock.