It’s been a challenging year for packaged food companies. Consumers have cut back on favorite name brands following years of above-average inflation. And the rise of new weight loss drugs have curbed appetites for many packaged foods.
However, markets tend to not just react to events, but overreact. And now, investors may have a chance to pick up leading consumer brands at a reasonable price. Such stocks could even be market leaders this year.
For instance, chocolate maker Hershey (HSY) has dropped nearly 20% in the past year. Shares are at 52-week lows. Yet even with a slight drop in spending, shares trade at 18 times earnings.
Hershey could also see some benefit as a new CEO takes over. The company has also attracted interest from potential buyers, although Hershey has often declined such offers in the past, another sign shares are oversold and ready to trend higher.
Action to take: Investors may like Hershey’s here with an eye towards long-term returns. Hershey also pays a 3.6% dividend at today’s prices, and has a history of growing its payout over time.
For traders, a rebound play may take some time. The June $165 calls, last trading for about $6.10, could see mid-double-digit returns or better on such a move higher. Traders can always take quick profits if shares jump higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.