Should You Buy This Millionaire-Maker Stock Instead of Costco Wholesale?

Core Viewpoint - The article discusses the contrasting investment opportunities presented by Costco and Hershey, suggesting that while Costco has performed well due to crowd enthusiasm, Hershey may present a contrarian buying opportunity due to its current undervaluation and strong brand power [2][3][10]. Costco Overview - Costco has a strong reputation as a leading retail company, known for its wide selection and low prices, supported by a membership fee model that drives profits [4]. - The stock has delivered a 222% return over the past five years, significantly outperforming the S&P 500's 102% return [2]. - Costco's average price-to-earnings (P/E) ratio over the past decade is 35, indicating a premium valuation, but earnings growth is expected to slow to about 9% annually, raising concerns about sustaining such high valuations [5]. Hershey Overview - Hershey is a major player in the confectionery industry, with well-known brands and a recent expansion into snacks, maintaining a high return on invested capital (ROIC) averaging over 17% [6][7]. - The company has historically provided substantial returns, with nearly 44,000% growth over the past five decades, making it a strong long-term investment [8]. - Currently, Hershey faces challenges due to adverse conditions affecting cocoa supply, leading to increased commodity prices and negatively impacting sales [9]. Investment Considerations for Hershey - Hershey's stock is currently trading at a P/E ratio of about 20, below its historical average of 25, and its dividend yield has reached 3%, indicating potential undervaluation [10][11]. - Despite short-term challenges, Hershey is viewed as a resilient company with a strong reputation, suggesting that it may recover once cocoa prices stabilize [11]. - Long-term investors may find Hershey to be a more attractive option compared to Costco, which may not sustain its current valuation levels [12].