Hershey: Tasty Recession Hedge At A Reasonable Price

(9min)

Summary

  • Hershey shares have pulled back to attractive levels due to cocoa price spikes, tariffs, and higher interest rates, creating a solid entry point for long-term investors.
  • Cocoa price volatility is a major headwind for 2025, but I don't see it impacting the firm's longer-term trajectory.
  • Hershey faces meaningful but not unmanageable risk from tariffs.
  • With shares near five-year lows and trading around 16x its normal annualized earnings power, Hershey is back in the buy zone.
  • Looking for a helping hand in the market? Members of Ian's Insider Corner get exclusive ideas and guidance to navigate any climate. Learn More »
Entrance to Hershey"s Chocolatetown Amusement Park.

mphillips007

Consumer staples stocks have been out of favor for a few years now. They've been hit by higher input prices and labor costs, supply chain challenges, and consumer pushback against grocery store price increases among other issues. In addition, higher interest rates have reduced the

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This article was written by

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Ian Bezek is a former hedge fund analyst at Kerrisdale Capital. He has spent the decade living in Latin America, doing the boots-on-the ground research for investors interested in markets such as Mexico, Colombia, and Chile. He also specializes in high-quality compounders and growth stocks at reasonable prices in the US and other developed markets.

Ian leads the investing group Ian's Insider Corner. Features of the group include: the Weekend Digest which covers everything from new ideas to updates on current holdings and macro analysis, trade alerts, an active chat room, and direct access to Ian. Learn More.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of HSY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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