It’s been a great run for chocolate maker Hershey (HSY) in the last few years. Check out this performance vs. the S&P 500:
- Since 1/1/10 — up 170% vs. 55% for the S&P 500
- Since 1/1/11 — up 100% vs. 35% for the S&P 500
- Since 1/1/12 — up 57% vs. 32% for the S&P 500
- Since 1/1/13 — up 34% vs. 20% for the S&P 500
This kind of outperformance is amazing, and it has been very hard to bet against Hershey stock over the last few years and make any money. However, there are signs that growth is slowing down and that investors should slow down, too.
Revenue is set to grow only about 7% this year and 6% next year, and while earnings are set to expand more rapidly, it might be time to reset expectations. The forward P/E of HSY stock is 23 right now, very rich for a $20 billion consumer products company.