Hawkins, Inc.: A 48% TSR Machine You Can't Afford to Ignore

Investors chasing outsized returns should take note: Hawkins, Inc. (NASDAQ:HWKN) has delivered a 48% compound annual total shareholder return (TSR) over the past five years, outpacing nearly every stock in its sector. This isn't just a numbers game—it's a story of EPS growth, dividend discipline, and strategic acquisitions that's positioning the company as a high-conviction buy. Let's dig in.

The TSR Engine: EPS Growth and Dividends Working Overtime

Hawkins' 48% CAGR TSR isn't a fluke. The math starts with its EPS growth, which has surged from $1.33 in 2020 to $2.86 in 2023—a 116% increase over four years. Pair that with a 19.52% average dividend growth rate over the past three years, and you've got a recipe for shareholder wealth creation.

Here's the magic:
- Dividend reinvestment adds fuel to returns. Since 2020, Hawkins has boosted its quarterly dividend from $0.13 to $0.18 per share (and $0.16 in 2023). Reinvesting those dividends since 2020 would have compounded gains even further.
- Stock price momentum aligns perfectly. From a 2020 close of $24.90, the stock hit an all-time high of $137.39 in December 2024, with a 5-year price gain of over 450%.

Why the Water Treatment Play Matters

Hawkins isn't just a passive beneficiary of rising EPS—it's actively expanding its moat. The company's water treatment division, which now accounts for 60% of revenue, has been turbocharged by acquisitions like Ecotech Enterprises (2023) and Industrial Research Corporation (2024). These deals not only boost scale but also give Hawkins proprietary tech in industrial water recycling and purification—a $300B global market growing at 7% annually.

The water angle is critical. As droughts and regulations tighten, industrial customers are desperate for solutions to cut costs and comply with environmental rules. Hawkins' tech allows factories to reuse 90% of their water, slashing expenses and emissions. This isn't just a niche play—it's a $1 billion revenue driver by 2026, according to management's latest guidance.

Valuation Concerns? Yes. But Momentum Outweighs Them

Critics will point to Hawkins' P/E ratio of 45x (vs. 22x for the industry) and say it's overvalued. Fair point. But here's why I'm willing to pay up:
1. EPS growth isn't slowing. The 2024 earnings beat (up 11.9% YoY) suggest the company can grow into its valuation.
2. Dividend yield might be low (0.46%), but payout growth is steady. The dividend has risen every year since 2020, and with free cash flow of $250 million in 2024, there's no sign of slowing.
3. The water market is a tailwind, not a fad. Regulations like the EU's Water Reuse Directive and California's water recycling mandates aren't going away.

The Bottom Line: Buy the Momentum, Ignore the Noise

Hawkins isn't a “set it and forget it” stock. It's volatile—its 2024 swing from $58.56 to $137.39 proves that. But for investors with a 3–5 year horizon, the TSR math is too compelling to ignore.

Action Items:
- Buy now if you can stomach short-term swings. The stock is up 8% YTD but still 10% off its highs.
- Reinvest dividends to maximize compounding.
- Set a stop-loss at $100 to protect gains.

This isn't a “value” stock—it's a growth juggernaut in a sector that's only getting hotter. If you're in it for the long game, Hawkins should be on your radar.

Final Take: Hawkins, Inc. (HWKN) isn't just surviving—it's thriving in water treatment. The 48% TSR isn't a typo. This is a high-conviction buy.