10 Best Chocolate Stocks to Buy Now

4. The J. M. Smucker Company (NYSE:SJM)

Number of Hedge Fund Holders: 34

The J. M. Smucker Company (NYSE:SJM) offers a diverse portfolio of trusted brands, including Folgers, Dunkin’, Café Bustelo, Uncrustables, Smucker’s, Voortman, Milk-Bone, and Meow Mix across North America. The company leads in various categories such as coffee, peanut butter, chocolate spreads, frozen handheld snacks, and more. Notably, Jif and Hostess are brands that produce chocolate-related products, such as chocolate spreads, cakes, and cookies, to name a few.

In Q1 2025, The J. M. Smucker Company (NYSE:SJM) experienced an 18% increase in net sales, primarily driven by the acquisition of Hostess Brands. Excluding the acquisition and other non-comparable factors, net sales growth was a modest 1%. The Sweet Baked Snacks segment, which includes popular brands like Hostess and Jif, performed well with a profit margin of 22.3%, showcasing strong brand strength. Despite pricing challenges in other retail categories, net income grew as operating profit increased by $46 million (15%), due to a significant boost in gross profit.

Cash flow from operations dropped to $172.9 million in the quarter (20.2% decrease from a year ago), and free cash flow fell to $49.2 million (down 27% from a year ago), reflecting tighter liquidity. Despite this, the company’s board approved a 2% dividend increase in the quarter from the same period a year ago, marking 23 years of consecutive dividend growth.

In August 2024, Voortman Bakery, part of  The J. M. Smucker Company (NYSE:SJM)’s sweet-baked snacks division, is launching Fall Favorites Cookies and Pumpkin Spice Wafers for a limited time. These products align with the company’s strategy to meet seasonal trends and consumer preferences.

Although the stock rose by 1.48% in the past month following the approval of a dividend increase, it is down 4.34% year-to-date due to inflation and reduced discretionary income. Organic sales growth remained flat without the boost from acquisitions, emphasizing the need for improvements in core operations.

Analysts are optimistic about the stock, projecting an upside potential of 5.27%. As of Q2 2024, 34 hedge funds, holding a combined investment of $844 million, are bullish on the stock, as per Insider Monkey’s database.