Why The Hershey Company is a buy below $200

on May 6, 2024
  • Hershey exceeded Q1 2024 earnings projections, displays strength.
  • Stagnant 2024 outlook contrasts with resilient operational performance.
  • Stock's downtrend halts, presenting potential accumulation opportunity.

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The Hershey Company (NYSE: HSY) recently reported its Q1 2024 earnings, surpassing both top and bottom-line estimates. With a Non-GAAP EPS of $3.07, exceeding expectations by $0.31, and a revenue of $3.25 billion marking an 8.7% year-over-year increase, Hershey has demonstrated robust performance in the face of evolving economic conditions and high cocoa prices.

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The company’s organic, constant currency net sales also witnessed an impressive 8.6% growth, reaffirming its position as a stalwart in the confectionery industry.

However, during the Q1 earnings release the company disappointed analysts with its 2024 full-year financial outlook, maintaining its projections for net sales growth to increase marginally by 2-3%, with no growth in earnings per share, and adjusted earnings per share.

With a focus on advancing agility and automation initiatives while navigating market challenges, Hershey has exhibited resilience and strategic foresight in its operations. Now, let’s see what the charts have to say about Hershey’s stock going forward.

End of the downtrend

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Hershey’s stock saw a severe decline in the second half of 2023, falling from above $270 to below $200. However, over the past few weeks, we can see that it has found support near the $180 level multiple times since then and has been trading in a $180-$205 range suggesting the downfall is over.

HSY chart by TradingView

Investors and long-term traders can start accumulating the stock below $200 with a stop loss below $178.8.

Wait for consolidation to end

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In the short-term hourly charts too we can see that the stock has been range-bound and has so far struggled to cross the $200 mark.

HSY chart by TradingView

Bullish short-term traders should wait for the stock to cross above $200 and close above it for a day before opening a long position. Traders who are bearish on the stock can initiate a short position here with a stop loss above $206.4 and a profit target at $183.4.

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