1 Reason to Watch Hershey Stock in 2025

Key Points

• A cocoa shortage has weighed on Hershey's profitability.

• But if cocoa supplies normalize, it could boost results.

• The stock's valuation and dividend yield look attractive.

• 10 stocks we like better than Hershey ›

One unexpected stock that has attracted increased attention recently is The Hershey Company (NYSE: HSY). The venerable chocolate and candy company has experienced a shortage of cocoa. Due to poor harvests in West Africa and the difficulty of increasing production, it has had no choice but to raise prices, leaving its stock well below its 2023 highs.

Nonetheless, it may surprise some investors that Hershey's challenges could change its investment case for the better. Here's how one factor bolsters the investment case for the stock.

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Why investors should watch Hershey stock

Investors should watch Hershey stock due to its low but rising stock price. Its shares have risen by 35% since their low in February. Still, that increase may indicate positive momentum, and despite recent growth, the stock still trades at a 32% discount to its all-time high in May 2023.

Moreover, one point worth noting is that the stock's P/E ratio is 25, close to the stock's five-year average, However, as mentioned before, that comes at a time when low cocoa inventories have depressed profits. In the first half of 2025, Hershey's net income of $287 million fell 71% compared to the same period in 2024.

In total, Hershey earned $2.2 billion in 2024. As conditions stand now, it will fall well short of that profit level in 2025. Still, it also implies that if cocoa supplies normalize, it could likely return to its 2024 profit levels, dramatically lowering the P/E ratio. Such a recovery should put upward pressure on the stock.

Additionally, the stock offers a dividend yield of 2.9%, well above its 2.2% average yield over the past five years. Also, the current dividend payout of $5.48 per share has increased for 16 consecutive years, a pattern that should make its dividend more attractive.

Ultimately, the reason to watch Hershey stock is the lower but rising stock price. Nonetheless, the potential for stock appreciation and rising dividend returns brought about by that lower share price may be the real draw for prospective investors.

Should you invest $1,000 in Hershey right now?

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Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hershey. The Motley Fool has a disclosure policy.