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Boost Your Portfolio with Chocolate Magic 🍫
Hershey rejects a sweet takeover bid—discover why its stock still has room to rally with strong fundamentals, juicy margins, and long-term potential!
Frank Angus
December 16, 2024
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Imagine this: a beloved chocolate giant fending off a takeover bid while its stock rallies in the face of rising cocoa prices and lukewarm interest in consumer staples.
Sounds like a dramatic plot, right?
Gif by WBPictures on Giphy
Well, that’s exactly what happened with Hershey Co. (NYSE: HSY) this December.
If you’re wondering why rejecting a takeover could be a bullish move, stick around.
We’re about to unwrap why Hershey stock could still have plenty of upside, even after the buzz around its recent rally.
The Takeover That Wasn’t Sweet Enough
Let’s talk about Mondelez International’s (NASDAQ: MDLZ) bid to acquire Hershey.
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While the exact numbers weren’t disclosed, the market reaction gives us some clues.
On the news, Hershey’s stock shot up to $208 per share, suggesting a potential valuation of around $39 billion.
But here’s the kicker: that’s far below the $56 billion market cap Hershey enjoyed just a year ago.
Management rejected the bid, calling it “too low.”
And they weren’t alone—Wall Street analysts agreed it wasn’t the right move.
Why?
Hershey’s leadership knows its worth, and so should you.
Why Hershey Still Has Room to Run
If $208 per share sounds decent, think again.
In 2023, analysts pegged Hershey’s stock value as high as $265.
HSY’s Chart from StockCharts.com
So, what’s changed?
Short-term market trends have dragged down consumer staples stocks like Hershey, Coca-Cola (NYSE: KO), and PepsiCo (NASDAQ: PEP), while tech darlings like AI and quantum computing hog the spotlight.
But here’s the good news: Hershey’s fundamentals are as solid as ever.
Sweet Margins & Strong Returns
Hershey boasts a gross margin of 44.5%, meaning it keeps nearly half of every dollar in revenue.
This financial muscle allows the company to reinvest in growth and innovation.
Add to that a return on invested capital (ROIC) of 25%, and you’ve got a company with a moat wider than the Grand Canyon.
And historically?
Hershey has outperformed the S&P 500 by 200% over the past 24 years.
HSY vs SPX Chart from StockCharts.com
If not for the recent slump, that figure would be closer to 500%.
Smart Money Knows What’s Sweet
Big institutions like State Street are betting on Hershey.
They recently increased their stake by 5.8%, bringing their holdings to $1.3 billion—or 3.5% of the company.
When the big players double down, it’s a signal worth paying attention to.
Is Hershey a Buy Today?
If you’re hunting for value, Hershey stock could be your golden ticket.
With strong financials, a resilient brand, and analysts who may soon revisit their price targets, this stock has the ingredients for success.
The rejected takeover bid wasn’t just a defense move—it was a declaration of Hershey’s true worth.
Let’s Chat!
Did this breakdown satisfy your sweet tooth for stock insights?
What do you think of Hershey’s decision to reject the Mondelez bid?
Could this stock be a delicious addition to your portfolio?
Share your thoughts in the comments below!
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