Shareholders in Hershey (NYSE: HSY) have been grappling with a challenging 2024, as underwhelming sales and a 12% decline in the stock price have left them hoping for sweeter days ahead. Despite these headwinds, there are compelling reasons to consider investing in Hershey stock, driven by the company's strong fundamentals and long-term growth potential. Let's explore two key reasons to buy Hershey stock like there's no tomorrow.

1. A Resilient Portfolio and Positive Long-term Outlook

Hershey, with its signature chocolate and a broad portfolio of iconic brands such as Reese's, KitKat, Jolly Rancher, and Twizzlers, is a globally recognized consumer goods pioneer. The company's expansion into salty snacks through acquisitions like SkinnyPop popcorn and Dot's Pretzels has further bolstered its growth prospects. This diversified portfolio and leadership across multiple categories highlight Hershey's attraction as an investment, with a positive long-term outlook despite any near-term weakness.

The challenges Hershey faced in 2024 reflected broader macroeconomic headwinds for the packaged foods industry, with customers pulling back on discretionary spending. Retail shoppers have been more budget-conscious in response to higher pricing in recent years. Hershey has been particularly exposed to historically high cocoa prices, which have directly impacted its operating margin. However, the company remains optimistic about a return to growth, with expectations that cocoa pricing may normalize lower in 2025. Efforts to improve supply chains and generate financial efficiencies mean Hershey could emerge stronger from these temporary headwinds.



2. An Attractive Valuation and Potential Acquisition Target

Hershey's stock is currently trading at a P/E ratio of 19, well below its 10-year average earnings multiple of 27. This compelling valuation, combined with the company's strong brand portfolio and market position, makes Hershey an attractive acquisition target for various consumer staples companies seeking to expand into confections or snacks. In 2024, Mondelez International (NASDAQ: MDLZ) reportedly approached Hershey for a potential takeover, although the board of directors rejected the offer as too low.

Hershey's undervalued stock price, combined with its potential as an acquisition target, presents an opportunity for investors to buy the stock at a bargain price. If the company gets back on track with improving operating and financial indicators over the next few quarters, it could mark the start of a sustained rally in its stock price.



Final thoughts

Hershey still has a lot to prove in what will be a crucial 2025. Recognizing the lingering uncertainties, I believe the recent market volatility presents a great opportunity to invest in a beaten-down industry leader well positioned to reward shareholders. Keep an eye on Hershey's progress in the coming quarters, as a return to growth and a potential acquisition could drive significant value for investors.