Stock of the Week: Hershey's

This chocolate stock can’t keep up with investor demands.

Andrew Willis 13 December, 2021 | 4:28AM
Facebook Twitter LinkedIn

 

 

Watch more Stock of the Week episodes here

Andrew Willis: Hershey's (HSY) is a giant in the minds of chocolate consumers around the holiday season. But if you’re thinking of investing in the confectioner, you should know you’re buying more than sweets.

The company has had quite the craving for salty snacks lately, and deals to purchase smaller companies and combine chocolate with pretzels have proven to be a hit with the market… and the opportunity isn’t cheap to own.

It’ll be about a billion dollars for an entrance into the aisle just adjacent to the chocolates and sweets. But Sector Director Erin Lash says the deal aligns with a vision to expand beyond the company’s home turf. At the same time, the company’s cost advantages and reach will help propel their acquired pretzel products into convenience, drug, and mass markets, where Hershey has a strong foothold.

The chocolate maker’s moves resonated with investors who rewarded the stock with recent all-time highs. But investors should put the deal in perspective – Hershey’s primary business is so big that the deal’s contribution is in the low-single-digit percentile. That’s what happens when you own half of the chocolate aisle.

For Morningstar, I’m Andrew Willis.

 

Get the Latest Stock Insights in Your Inbox

Subscribe Here

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
The Hershey Co230.32 USD2.02Rating

About Author

Andrew Willis

Andrew Willis  Senior Editor at Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

© Copyright 2022 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy