We recently published a list of 12 Best Chocolate Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where The J. M. Smucker Company (NYSE:SJM) stands against other best chocolate stocks to buy according to hedge funds.
According to a National Confectioners Association (NCA) survey, 95% of customers use chocolate and candies to celebrate the winter holidays. Sales of holiday confections hit $7 billion in 2023 and are predicted to increase by 3% in 2024. While 72% of Americans prefer chocolate or candies in stockings over gum, 56% of adults prefer giving and getting chocolate over wine. Sixty-four percent feed themselves more sweets, 60% bake holiday treats, and 70% use candy.
As per NCA CEO John Downs:
“Chocolate and candy are essential parts of the winter holidays.”
According to Global Market Insights, in 2024, the global chocolate industry was estimated to be worth $125 billion. From 2025 to 2034, it is expected to grow at a compound annual growth rate of nearly 3.3%. Consumer desire for indulgent products, premium offers, and health-conscious alternatives like dark and organic chocolate drives the global market.
There are a number of noteworthy trends in the chocolate industry, including customers’ growing preference for artisanal and premium chocolates. The U.S. Department of Agriculture (USDA) reports that the world consumed 5.05 billion metric tons of cocoa in 2022-2023, showing a rise in demand for high-end chocolate goods.
A few massive global companies control a large portion of the manufacture and distribution of chocolate and associated candies. The Mars family is the private owner of Mars, the biggest manufacturer of chocolate products and the company behind popular chocolates like Snickers and M&Ms.
Investors have found chocolate stocks to be an appealing investment since they have experienced financial gains. As of February 7, 2025, the broader market’s cocoa industry returned 86.69% in one year, 56.15% over three years, 28.19% over five years, and 13.71% over ten years.
According to the World Bank, concerns about new supply caused cocoa prices to rise again. In December, the price of cocoa increased by 30%, reaching an average of almost $10 per kilogram. Strong seasonal demand combined with worries about the unfavorable weather in West Africa caused this dramatic spike. According to estimates, the world’s cocoa production decreased by 14% during the 2023-24 season, from 4.9 million metric tons in 2022-2023 to 4.2 mmt. The main cause of this fall is the decreased production in Ghana and Côte d’Ivoire, which together account for around 60% of global cocoa production. As per the World Bank, the 2024-25 season is anticipated to see an improvement in supply conditions, especially in Côte d’Ivoire, where favorable weather across important growing regions could increase production by as much as 17 percent. Prices are expected to drop by about 13 percent in 2025 and another 2 percent in 2026 as more supplies hit the market, following an anticipated doubling in 2024. However, there is a considerable upside risk to prices because of the possible recurrence of unfavorable weather in West Africa.
Looking forward, according to JP Morgan’s report, the worldwide scarcity of supply and ongoing underinvestment in cocoa crops are two reasons driving up cocoa prices. Cocoa prices are expected to stay high in the medium term, circling about $6,000/tonne once a balanced market is achieved, despite expectations for a better crop in the 2024-2025 season. This could impact the chocolate industry, as confectionery costs are anticipated to rise by 2025.
Celine Pannuti, Head of European Staples & Beverages, J.P. Morgan, stated:
“Pricing has yet to pick up meaningfully, but we expect this to accelerate potentially to the low-teens in 2025. We see the chocolate market set for inflation largely unprecedented in recent history.”
A wholesaler distributing peanut butter, fruit spreads and specialty spreads to a retailer.
Methodology:
We sifted through holdings of chocolate ETFs and online rankings to form an initial list of 20 chocolate stocks. From the resultant dataset, we chose 12 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 900 hedge funds in Q3 2024 to gauge hedge fund sentiment for stocks. We have used the company’s market capitalization as of February 4 as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
The J. M. Smucker Company (NYSE:SJM)
Number of Hedge Fund Holders: 30
Market cap as of February 4: $11.27 billion
One of the Best Chocolate Stocks, The J. M. Smucker Company (NYSE:SJM) is a trustworthy consumer staple business that has steady growth and long-lasting competitive advantages. Since its founding in 1897, the company has expanded to become a $9 billion behemoth, with over 90% of American households buying its products. Its diversified portfolio includes well-known brands like Jif, Uncrustables, Milk-Bone, and Café Bustelo. Richard and Timothy Smucker own 3.2% of the business, showing the strong family ownership of the business and how management’s goals fit with long-term shareholder value.
The firm dominates several markets, including frozen handheld snacks, peanut butter, chocolate spreads, coffee, and more. Notably, Jif and Hostess are brands that manufacture chocolate-related products such as spreads, cakes, and cookies, to name a few.
The J. M. Smucker Company (NYSE:SJM) has agreed to pay $40 million in cash to JTM Foods for the sale of its Cloverhill and Big Texas trademarks as well as some private label goods. The agreement, which supports Smucker’s goal of expanding the Hostess brand, involves 400 workers and a manufacturing site in Chicago. It is projected that the transaction, which is scheduled to finish by April 30, 2025, will not have an impact on earnings and that the money raised will be utilized to pay down debt.
The J. M. Smucker Company (NYSE:SJM) reported the second-quarter performance of 2025, with shipments up 1% and consumption up 0.6%, revealing tightly aligned metrics with no Thanksgiving timing effect. Over the past five quarters, the company has maintained strong trends and achieved industry-leading share performance in the frozen and snacks areas. Consistent top-line growth has been fueled by investments in trade, advertising, and innovation, especially in frozen and snack products. The firm’s solid financial position is further supported by the fact that free cash flow conversion has surpassed 100% as a result of efficient working capital management, particularly in inventory.
John W. Rogers’s Ariel Investments was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 1.63 million shares worth $197.55 million as of Q3.
Overall, SJM ranks 8th on our list of best chocolate stocks to buy according to hedge funds. While we acknowledge the potential for SJM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SJM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
