10 Best Chocolate Stocks to Buy Now

3. The Hershey Company (NYSE:HSY)

Number of Hedge Fund Holders: 39

The Hershey Company (NYSE:HSY) produces and markets chocolate, sweets, and snacks across three segments: North America Confectionery, North America Salty Snacks, and International. The company now employs 20,000 people in the U.S. and operates in 80 countries, offering a wide range of products including chocolate, non-chocolate confectionery, gum, mints, protein bars, baking ingredients, snack items, and spreads.

In Q2 2024, consolidated net sales for The Hershey Company (NYSE:HSY) declined by 16.7% to $2.07 billion. This downturn was primarily driven by inventory reductions across the North America Confectionery and International segments, largely due to the implementation of a new ERP system and unfavorable shipment timings.

Despite the overall decline in sales, Hershey’s Salty Snacks portfolio showed positive momentum, with Dot’s Homestyle Pretzels retail sales increasing by 42.3% in the quarter. Gross margin was significantly impacted, falling to 40.2% from 45.5% due to higher costs and inefficiencies, and operating profit also declined.

Regarding liquidity, The Hershey Company (NYSE:HSY) remains committed to strategic investments, projecting capital expenditures of between $600 million and $625 million for 2024. The ongoing implementation of a new ERP system and product innovations in the second half of 2024 is expected to energize key categories and support long-term growth.

The Hershey Company (NYSE:HSY) is focusing on sustainability and social impact through its ‘Cocoa for Good’ strategy. The company has already reduced emissions by 43% and aims for 50% by 2030 through sustainable farming of cocoa while eliminating 1.7 million pounds of packaging, and accelerating its deforestation commitment to 2025.

Despite revenue and earnings declines, investments in digital marketing and customer loyalty programs have bolstered its market share. As such, Hershey’s stock saw an uptick of 3.58% in the past month and 8.24% on a YTD basis. Moreover, strategic investments in digital infrastructure and a commitment to innovation provide a promising foundation for future growth.

Consequently, 39 hedge funds have collectively invested $506 million in the company, as per Insider Monkey’s database.