Stocks to Sell #1: The Hershey Company (HSY)
Click to Enlarge Hershey (HSY) has amply rewarded investors who have held the stock through its nonstop run of recent years. HSY stock rose 37% in 2013, it’s up nearly 12% so far in 2014, and it has delivered an average annual return of 32% since the 2009 low.
The fundamentals remain strong: Earnings estimates are gradually ticking higher, and the company is on track for double-digit earnings growth in the coming year on the strength of new products.
Not least, Hershey recently announced a $250 million share repurchase.
All of this has been great news for HSY stock, but the trouble now is valuation: Hershey shares are trading at a pricey 29.7 times trailing earnings and 23.5 times forward estimates. While valuation alone isn’t a catalyst for a downturn, the stock could soon see reduced demand with the shares up from the mid $90s to nearly $110 since the start of the year.