The Hershey Company (HSY): A Bull Case Theory

Core Thesis - The Hershey Company is viewed positively by investors, with a current share price of $185.08 and trailing and forward P/E ratios of 27.67 and 27.70 respectively [1] Group 1: Stock Performance and Turnaround - Hershey's stock performance illustrates the timing of corporate turnarounds, with the author noting a purchase at $189 in November 2023, resulting in a slightly negative position nearly two years later [2] - Significant turnarounds in high-quality businesses typically require about three years, with two years for stabilization and an additional year for course correction [2] Group 2: Market Dynamics and Challenges - The primary disruption for Hershey was a sharp increase in cocoa prices, which created temporary margin pressure, similar to challenges faced by Mondelez [3] - Other companies, like Disney, have experienced longer turnaround cycles, with issues not being addressed until leadership changes occurred [3] Group 3: Investment Timing and Strategy - The key insight is the importance of timing in entering turnaround situations; early investment in Hershey before the market adjusted to cocoa price shocks resulted in capital being tied up [4] - A more strategic entry point could have been around $165 in June 2025, providing immediate upside [4] - Position sizing is crucial; investing in large tranches while the stock was declining exacerbated timing issues [5] Group 4: Fundamental Resilience - Despite challenges, the investment thesis for Hershey remains intact, with easing cocoa pressures and the business regaining stability, approaching breakeven [5] - A previous bullish thesis highlighted Hershey's strong market share, pricing power, and long-term growth potential, with a stock price appreciation of approximately 19.16% since coverage [6]