Is Hershey Stock a Buy, Sell, or Hold in 2025?

Core Viewpoint - Hershey's stock has declined approximately 45% from its 2023 highs, resulting in a historically high dividend yield of 3.7%, raising questions about the company's ability to manage long-term challenges due to rising cocoa costs [1] Group 1: Case for Selling Hershey Stock - The rapid increase in cocoa prices is expected to negatively impact profit margins, leading to weak financial results for Hershey for potentially several years as the cocoa market stabilizes [2] - Chronic underinvestment in cocoa production, aging trees, crop diseases, and adverse weather conditions are fundamental issues affecting cocoa supply [3] - Hershey's hedging strategies have mitigated cocoa price volatility, but these hedges will expire, and the company has warned of a potential 36% earnings decline in 2025, with challenges likely extending beyond that year [4] Group 2: Case for Holding Hershey Stock - Hershey has experience navigating commodity cycles and plans to implement cost-cutting and price-increasing strategies, which are typical responses in the consumer staples sector [5] - Despite a societal shift towards healthier diets, chocolate remains a popular indulgence, suggesting that price increases may be accepted by consumers [6] - The significant stock price drop and high dividend yield indicate that much of the negative impact may already be reflected in the stock price, similar to conditions during the Great Recession [6] Group 3: Case for Buying Hershey Stock - The Hershey Trust, which controls the company, has a vested interest in ensuring stable operations and reliable dividend growth, aligning with investor interests [9] - The Trust's influence allows Hershey to prioritize long-term strategies over short-term pressures from Wall Street, providing the company with time to address current challenges [10] - Investing in Hershey at a historically high yield could be advantageous for long-term investors who recognize the potential for recovery as cocoa issues are resolved [11]