Hershey Co. (HSY) is a leading confectionery manufacturer in the U.S, controlling around 46% of the domestic chocolate space. Beyond its namesake label, the firm's mix has expanded over the last 85 years and now consists of 90 brands, including Reese's, Kit Kat, Kisses, and Ice Breakers.
The company has been benefiting from a recovery in consumption in the U.S. and international markets. In fact, consumption has been elevated both away from home and at home. HSY’s focus on acquisitions to expand its portfolio also bodes well. In its most recent reported results, earnings surpassed estimates and sales jumped year over year.
HSY has a current ratio of 1.4, which indicates it has more than enough liquidity to handle short-term obligations. This has led to a Quality Grade of A in our POWR Ratings system. The company has a steady history of growth with earnings rising an average of 12.8% over the past five years. Analysts expect earnings to rise 12.7% for this year as well.
The stock looks a bit overvalued, though, with a trailing P/E of 25.46 and a forward P/E of 23.81. HSY was showing bullish momentum from March to July. However, performance has been mixed since as shown in the chart below.
Take a look at the 1-year chart of HSY below with added notations:
HSY has been in a steady trend higher since March but has recently struggled to get past the $182.50 level (blue). That mark has been tested as resistance multiple times over the past few months. Now that HSY has turned higher, the stock could be set to hit new highs in the coming weeks.
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The ideal long position on the stock would be on a breakout above the $182.50 resistance level, with a protective stop placed below the entry point.
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HSY shares were trading at $178.50 per share on Thursday morning, down $1.06 (-0.59%). Year-to-date, HSY has gained 18.96%, versus a 25.54% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing.
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