The Hershey Company (NYSE: HSY) recently released Q3 2018 results. It warned its profits will come under pressure given rising costs but there are plans to offset these higher costs with strategic price increases on roughly a fifth of HSY products.

HSY is not an investment with which you will get rich overnight.

HSY is the type of company that is more suited for investors who (1) seek to avoid significant stock price volatility and (2) desire a relatively safe dividend where the pace of growth will likely continue to exceed the rate of inflation.

Summary

• HSY recently released Q3 2018 results and warned its profits will come under pressure given rising costs.
• Higher costs will likely persist into 2019 but there are plans to offset these higher costs with strategic price increases on roughly a fifth of HSY products.
• HSY shares are more suited for investors seeking to avoid significant stock price volatility and who desire a relatively safe dividend where the pace of growth will likely continue to exceed the rate of inflation.
• I currently view HSY shares as overvalued.

Introduction

I have owned shares in The Hershey Company (NYSE: HSY) in an undisclosed Registered Retirement Savings Plan (RRSP) account since just immediately subsequent to HSY’s last stock split which occurred June 15, 2004.

I have covered HSY in the following previous articles:

Hershey Stock Analysis – Boring Can Be Sexy – February 5, 2017

Hershey – There Are Far Better Investment Options Out There – February 5, 2018

Hershey – Beaten Down….Sweet! – June 6, 2018

Now that HSY has released its Q3 results on October 25, 2018 I thought I would have a quick look at management’s outlook for the remainder of the current fiscal year and how the company has recently performed.

At the time of my February 5, 2018 article, HSY had just pulled back to ~$103 from a high of ~$114 at the beginning of January 2018. In that article I indicated:

‘There is a vast universe of publicly traded companies in which you can invest and many offer far more upside than HSY. While we have owned HSY for many years and have been aptly rewarded, I think you will be challenged to generate a decent return if you invest in HSY at current levels (even with the recent pullback).’

Subsequent to that article, HSY retraced to the ~$90 level and I viewed the shares as attractive. In my June 6^th article I concluded by saying:

‘I currently have several hundred HSY shares in one of our retirement accounts with a sub $50 average cost and view my current position to be a ‘full position’. As a result, I will not be acquiring additional shares other than through the automatic reinvestment of the quarterly dividends. If this were not the case, however, I would definitely acquire HSY shares at the current market price.’

In this article I take a quick look at how HSY has performed subsequent to my June 6^th article and provide my opinion as to whether this is an opportune time for conservative investors to acquire HSY shares.

Before moving on to my HSY analysis here are some pictures I took when I visited the Hershey museum; I visited the museum when I travelled to Hershey, Pennsylvania to participate in the 7^th Annual March For The Fallen (see here and here) in late September 2018.

I was fascinated to learn a great deal more about the company’s evolution and in particular the extent of HSY’s operations in Cuba; HSY exited Cuba in 1946 when it sold its operations to the Cuban Atlantic Sugar Company.

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