Forget the Heart-Shaped Box
This isn’t the first thought when trying to pair some chocolate with those flowers, but the winner of this discussion is The Hershey Company (NYSE:HSY). Flirting near its 52-week high and up about 35% TTM, the century-old chocolate king is an excellent company. Chocolate is an $83 billion dollar business and Valentine’s Day puts some fire under the sales. Numbers from recent years reveal that 58 million pounds of chocolate are sold in the US during the week preceding Valentine’s Day. Some might argue that premium chocolate is the item of choice, but among children and consumers on a budget, Hershey makes some hefty profits.
For some reason or another, chocolate and candy take less fire from health advocates than soft drinks and salty snacks. Chocolate is generally viewed as a dessert, a treat, and eaten in smaller quantities at one time. Whatever the reasoning, people continue to consume it and will flock to Hershey because of their quality and variety of products at a fair price. These trends are projected to grow, with Hershey increasing its 2013 EPS forecast to grow at least 10%. If so, the 2% yield could become a thing of the past.
The other winner, if eligible for investors, would be Mars, Inc. The M&M giant is one of the largest and successful privately held companies in the sector, and if it ever went public, buyers would be lining up, myself included. The world is consuming more than enough chocolate for both of these companies to prosper for many years. In my personal case, they have an edge with my better half’s favorite being pretzel-M&M’s (Hershey–get on board!).
Valentine’s Day influences impulse buying, but don’t carry this mindset when building your portfolio. The first two companies are higher risk, so careful understanding and a discretionary investment is a possibility. However, the chocolate industry shows no signs of slowing down, and Hershey offers a stable opportunity to get in on the success.
The article These Stocks Will Last Beyond February 14 originally appeared on Fool.com and is written by Kyle Vaughan.
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