Cramer Says Hershey (HSY) is Poised for a Comeback

Jim Cramer recommended shares of Hershey (NYSE: HSY) on his CNBC show, Mad Money, last night. Cramer believes Hershey is "a $45 stock hiding inside of a $38 stock".

Cramer started the segment by pointing out that Hershey has had a rough time managing commodity costs since 2006. From 2001 to 2005, Hershey sustained an earnings growth rate of about 14% a year, but as its costs started rising in 2006, the company has only been able to grow earnings at about 4-6% over the period from 2006.

With commodity prices falling drastically over the last few months, however, and two price increases earlier this year, Cramer believes that Hershey is ready for a turnaround. Cramer cites the recent declines of sugar and cocoa, which make up 19% and 15% of Hershey's costs, respectively, and the expected decline of milk over the next 12 months, which accounts for about 9% of the company's costs.

With Halloween less than a month away, Cramer expects Hershey to report blow-out Q3 results. He also likes the fact that Hershey is streamlining its supply chain and focusing on expanding its overseas operations. Hershey's venture into premium chocolate should also help results, according to Cramer.

The Hershey Company engages in manufacturing, marketing, selling, and distributing various chocolate candy, sugar confectionery, refreshment, and snack products, as well as food and beverage enhancers.

You May Also Be Interested In

• Hershey (HSY) PT Lowered to $200 at Piper Sandler
• Agenus Inc. (AGEN) PT Raised to $30 at H.C. Wainwright
• Western Midstream Partners (WES) PT Raised to $51 at Mizuho