Will Hershey have a Sweet Valentine's?
Will Valentine's Day help Hershey? According to the Discover Card's Fourth Annual Valentine's Day survey, 47% plan to buy their Valentine candy or chocolate, and 32% of women hope to receive chocolate for Valentine's Day. Over all, average spending per Valentine is expected to go down this year to $86.90 from $88.50 last year.
So will a surge in sales for Valentine's Day help Hershey? Hershey reported higher earnings on January 27 beating by $.05 per share. They have also reported that they will have no impact from the peanut butter recall.
Historically, from Jan, 1993 - Jan, 2006, Valentine's is a good time to buy Hershey stock for a short term hold (slightly more than 3 weeks). It is up 100% of the time by an average move of 6% in that time period (Q4 earnings report in Jan - Valentine's Day) based on data from LIM and MarketEdge.
- In 2007, Hershey was positive from the day it reported, 1/24/07 - 2/14/07, but only by a little more than 1%
- In 2008, Hershey was down from the day it reported, 1/24/07 - 2/14/07
- In 2009, Hershey is up 5.3% YTD but and up 4.2% since it reported earnings
In 2008, Hershey raised the wholesale price of its candy twice on rising costs of cocoa and milk and stating that it is more exposed to these price increases than competitors Mars and Nestle (NSRGY).
Now cocoa is down over 18% since hitting its highs in July 2008, and is only up ~2% YTD. Sugar is also down ~18% since its March 2008 highs, but is up nearly 7% YTD.
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