Hershey Foods Corp (HSY-N)

The CEO turned it around and just reported an amazing quarter. Continue to own it.

Global leader with over 80 brands. A lot of revenues are inside NA and US, so tariffs are not a worry. Last earnings topped estimates. A defensive growth name as we get late in the cycle. Price recently pushed above 200-day moving average, which is encouraging. Pretty decent valuation for a consumer staple. Yield is 2.7%. (Analysts’ price target is $98.33.)

This was trapped in never-never land, but is starting to become a little bit more favourable. The chart is pretty volatile looking. The stock is trying to move up, but in a choppy way. If you want to continue to own this, you have to accept the fact that this can deliver a 15% haircut in a short period.

An interesting company from the perspective of having had some good returns. They’ve done a lot of work on cleaning up the costs side. However, this is a sector that he is not a big fan of. If you own, it is a name you should be happy that you have done well with, but you could now comfortably move on to a sector, like tech, that has better prospects looking forward.

There has been a slowing in earnings on the US side. A big part of this is the shifting of consumers’ preference to a healthier lifestyle and eating habits. They have also made a bet on China’s growth moving forward, to the point where they have actually created the Asian Innovation Centre, where they look to customize sweets for the Chinese market. The bad news is that it hasn’t worked yet. Inventories have built and when you have high inventories, you need to cut prices. Pays about 2.5% dividend yield.