So far this year, the S&P 500 index has dropped 19% from its highs. While I typically view these sell-offs as an opportunity to add up on some of my best-performing growth stocks (such as The Trade Desk or Wingstop ), one of my favorite dividend stocks has also fallen through the cracks.
Coca-Cola (KO 2.24%) is a very well-run company, highlighted by its status as a Dividend King. But it is also expensive, with its price-to-sales (P/S) and price-to-earnings (P/E) ratios both above their five-year averages and its dividend yield near decade lows.
HSY's LesserEvil acquisition strengthens its better-for-you snack portfolio to meet evolving consumer preferences.
In the most recent trading session, Hershey (HSY) closed at $166.83, indicating a +1.76% shift from the previous trading day.
Hershey (HSY) reachead $169.62 at the closing of the latest trading day, reflecting a -0.82% change compared to its last close.
Hershey (HSY) reachead $168.01 at the closing of the latest trading day, reflecting a +0.5% change compared to its last close.
Even well-run companies face hard times now and again. In fact, it is the ability to survive the hard times that makes a company well run in the first place.
The consumer staples industry is large and varied. There are always some consumer staples companies that are attracting a great deal of interest on Wall Street while others languish in relative obscurity.
Hershey's stock has outperformed the S&P 500 recently, despite high cocoa prices and expected short-term weakness. Revenue and profitability have grown across all segments, with significant gains in North American Confectionary and Salty Snacks. Management anticipates cost pressures in 2025 but expects improvements by 2026 due to operational changes and potential cocoa price normalization.
The Hershey Company HSY, an industry-leading snacks firm, is facing mounting challenges, including historically high cocoa prices, weakening consumer demand and intensifying competition in key markets. Such challenges have led to a 6.1% drop in its share price in the past six months.
I rate The Hershey Company (NYSE:) as a HOLD, waiting for the earnings hype to cool down before potentially buying. I expect cocoa prices to keep rising due to climate change, negatively impacting Hershey's profit margins and net income. Despite strong historical financial growth and dividend performance, the company's future growth may slow, making current valuation fair but without a margin of safety.
The recent decline in Hershey's stock is now largely pricing-in the cost headwinds in 2025. A quick recovery in 2026, however, is something that I wouldn't rely on given the speculative nature of commodity prices. The business is also in a very delicate situation as far as price increases are concerned, and this could result in more short-term volatility.