Group 1 - The Hershey Company (HSY) is recognized for its strong brand portfolio, including Hershey, Reese's, and recent acquisitions like Dot's Pretzels, SkinnyPop, and LesserEvil [1] Group 2 - The company is positioned in the consumer goods sector, particularly in the confectionery market, which is characterized by strong brand loyalty and consistent demand [1]

Core Viewpoint - The Hershey Company is currently facing significant challenges, but these challenges may present a unique investment opportunity for long-term investors due to its historical performance and dividend reliability [1][5][11]. Company Overview - The Hershey Company (HSY) is a leading confectioner and snack maker, known for its chocolate products, including the Hershey brand and Reese's [2]. - The company has a history of growth through both organic means and acquisitions, recently expanding into salty snacks by acquiring companies like Dot's Pretzels [2]. Dividend Performance - Hershey has increased its dividend for 15 consecutive years, with an average annual increase of 10% over the past decade [3]. - The current dividend yield is approximately 3.2%, which is at the high end of its historical range, making it attractive for long-term dividend investors [4]. Current Challenges - Hershey's stock has lost over one-third of its value since its peak in 2023, primarily due to skyrocketing cocoa prices and projected declines in adjusted earnings of 30% to 40% by 2025 [5]. - The rise of new weight loss drugs may also reduce demand for sweets and snacks, adding to the company's challenges [6]. Positive Outlook - The Hershey Trust controls 79% of the voting rights and has a vested interest in maintaining a reliable and growing dividend, which may support conservative management practices [7]. - The company is expected to manage high cocoa prices by implementing price hikes and cutting costs, with the potential for market adjustments over time [8]. - Despite a 2% volume decline in 2024, there was a 6% increase in the final quarter, indicating resilience against the impact of weight loss drugs [9]. Investment Perspective - Investing in Hershey stock is seen as a contrarian play, requiring recognition of the company's challenges and belief in its ability to survive them [11]. - Successfully navigating cocoa price disruptions could lead to improved business fortunes and a higher valuation on Wall Street [12].

Group 1: Dollar General - Dollar General is a leading discount retail store with over 20,000 locations in the U.S. and Mexico, facing weak traffic trends due to high grocery prices [3] - Same-store sales grew 1.4% in fiscal 2024, but full-year earnings per share fell 32% year over year due to declining store traffic and higher costs [4] - Management aims to improve margins through supply chain enhancements and automation, targeting an operating margin of at least 6% by 2028 [5] - The company supports a quarterly dividend of $0.59, with a forward yield of 2.96%, which is more than double the S&P 500 average [6] Group 2: Hershey - Hershey is a dominant confectionery company facing uncertainty due to record-high cocoa prices, which have affected profitability and driven the stock down [7] - The company reported a slight sales increase of 0.3% in 2024, with adjusted earnings expected to decline by about 35% in 2025 due to high cocoa prices [8] - Management is focused on cost management to improve margins, and cocoa prices are expected to decline, which could positively impact stock performance [9] - Hershey's quarterly dividend is $1.37, with a forward yield of 3.20%, and the stock has rebounded 15% since cocoa prices peaked [12]