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There’s no denying that Christmas and chocolates go hand in hand. In spite of this, one cannot overlook the shift in consumer preference toward healthier snacks like nuts and increased competition from the broader snacking category, which are denting demand for chocolates. Again, high healthcare costs and still-tightened credit availability continue to hurt consumer discretionary spending in the U.S.
That said, overlooking the sector will not be prudent as there are several companies with a decent performance history and strong fundamentals, signaling at a profitable investment opportunity. After all, year-end seasonal factors will continue to drive stocks higher.
The Hershey Company (HSY - Free Report) is one such company that continues to show strength in several areas and adding the stock to your portfolio should not be a disappointment. The company is the largest chocolate manufacturer in North America as well as a global leader in chocolate and non-chocolate confectionery.
With assets of over $21.9 billion, Hershey markets some of the world’s leading brands which enjoy widespread consumer acceptance.
What Makes the Stock an Attractive Pick?
Share Price Movement: Hershey’s shares have gained around 17% year to date, compared to 2.6% growth of the Zacks categorized Food-Confectionary industry. In fact, in the last six months, the company’s stock price has gained nearly 7% versus a 7.2% dip for the broader industry.
Estimates Revisions: Over the past 60 days, the Zacks Consensus Estimate for Hershey increased 1.4% to $4.32 per share for 2016 and 2% to $4.65 per share for 2017. The positive earnings estimate revisions indicate analysts’ confidence and substantiate the Zacks Rank #2 (Buy) for the stock.
Also, Hershey beat earnings estimates in all of the past four quarters, the average being 6.48%. The company’s productivity improvements and cost savings initiatives should drive the stock’s performance in the upcoming quarters as well.
Earnings Growth: Hershey has registered 3-5 year earnings per share growth of approximately 5.45%. This earnings momentum will likely continue in the near term, as reflected by the company’s projected EPS growth (F1/F0) of 4.75%.
Solid ROE: Hershey’s Return on Equity (ROE) ratio is 85.26% compared with the industry average of 47.34%. This indicates that the company reinvests more efficiently as compared with its peer group.
Focus on Innovation & Cost Savings: In order to counter tepid sales, management has optimized its North American manufacturing footprint, added manufacturing capabilities in international markets, increased supply chain productivity, invested in cost saving projects and improved the sales mix significantly under its continuous improvement and productivity (CIP) program. In 2016, the company expects to achieve combined (CIP and business productivity initiative) savings of around $135 million.
Other Stocks that are Worth to Look
Investors may also consider stocks like Ingredion Inc. (INGR - Free Report) , Lancaster Colony Corp. (LANC - Free Report) and Omega Protein Corporation .
Ingredion is expected to witness 20.1% growth in full-year 2016 earnings.
Fiscal 2017 earnings for Lancaster are expected to rise 8.41%.
Full-year 2016 earnings for Omega Protein are expected to grow 41.33%.
"Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>"
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5 Reasons to Buy Hershey (HSY) this Christmas
There’s no denying that Christmas and chocolates go hand in hand. In spite of this, one cannot overlook the shift in consumer preference toward healthier snacks like nuts and increased competition from the broader snacking category, which are denting demand for chocolates. Again, high healthcare costs and still-tightened credit availability continue to hurt consumer discretionary spending in the U.S.
That said, overlooking the sector will not be prudent as there are several companies with a decent performance history and strong fundamentals, signaling at a profitable investment opportunity. After all, year-end seasonal factors will continue to drive stocks higher.
The Hershey Company (HSY - Free Report) is one such company that continues to show strength in several areas and adding the stock to your portfolio should not be a disappointment. The company is the largest chocolate manufacturer in North America as well as a global leader in chocolate and non-chocolate confectionery.
With assets of over $21.9 billion, Hershey markets some of the world’s leading brands which enjoy widespread consumer acceptance.
What Makes the Stock an Attractive Pick?
Share Price Movement: Hershey’s shares have gained around 17% year to date, compared to 2.6% growth of the Zacks categorized Food-Confectionary industry. In fact, in the last six months, the company’s stock price has gained nearly 7% versus a 7.2% dip for the broader industry.
HERSHEY CO/THE Price and Consensus
HERSHEY CO/THE Price and Consensus | HERSHEY CO/THE Quote
Estimates Revisions: Over the past 60 days, the Zacks Consensus Estimate for Hershey increased 1.4% to $4.32 per share for 2016 and 2% to $4.65 per share for 2017. The positive earnings estimate revisions indicate analysts’ confidence and substantiate the Zacks Rank #2 (Buy) for the stock.
Also, Hershey beat earnings estimates in all of the past four quarters, the average being 6.48%. The company’s productivity improvements and cost savings initiatives should drive the stock’s performance in the upcoming quarters as well.
Earnings Growth: Hershey has registered 3-5 year earnings per share growth of approximately 5.45%. This earnings momentum will likely continue in the near term, as reflected by the company’s projected EPS growth (F1/F0) of 4.75%.
Solid ROE: Hershey’s Return on Equity (ROE) ratio is 85.26% compared with the industry average of 47.34%. This indicates that the company reinvests more efficiently as compared with its peer group.
Focus on Innovation & Cost Savings: In order to counter tepid sales, management has optimized its North American manufacturing footprint, added manufacturing capabilities in international markets, increased supply chain productivity, invested in cost saving projects and improved the sales mix significantly under its continuous improvement and productivity (CIP) program. In 2016, the company expects to achieve combined (CIP and business productivity initiative) savings of around $135 million.
Other Stocks that are Worth to Look
Investors may also consider stocks like Ingredion Inc. (INGR - Free Report) , Lancaster Colony Corp. (LANC - Free Report) and Omega Protein Corporation .
All three companies carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ingredion is expected to witness 20.1% growth in full-year 2016 earnings.
Fiscal 2017 earnings for Lancaster are expected to rise 8.41%.
Full-year 2016 earnings for Omega Protein are expected to grow 41.33%.
"Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>"