Hershey released earnings this morning, and The Street did not like what it heard. (65 cents versus an estimate of 71 cents). The stock is down over $1.87 at this writing to $50.50. I view this as a buying opportunity.
Both cocoa and sugar, especially sugar, have been coming down in price recently, and this bodes well for the future. Also, I like all the new product innovation that the company is showing.
The biggest reason of all for getting in today is that starting from the close today, the day that HSY reports first quarter EPS, to the close 16 trading days later (Feb 16 in this case.) HSY has always been up since 1993. MarketHistory.com analyst Mickey Schoenhals featured this bullish tendency in Hershey in a trading idea published on that site this morning.
You can buy the stock with a stop loss of $47.79, and risk a few points, or if you want more leverage, I’d buy the August 55 calls, currently trading at $1.15. I think by August HSY could touch $60 and then these calls would be worth around $5. I really like the long term pattern that HSY has made, but it may take a while for the stock to gather steam. That is why I would not mess with any near term options, despite the good 16 day start that you may get.
If the stock does indeed pop up over the next 16 days and you can get near $3 for the calls, take the money and reload on yet another pullback. This stock trades in fits and starts, and it is good to take a very quick profit if you are fortunate to get one.
