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November 24, 2010
Big Kiss
HSY, $HSY, The Hershey Co. Ranked at Top of Food Industry Stocks by
ValuEngine
In honor of the US Thanksgiving holiday we did a screen for food-related
companies with our ValuEngine Institutional software (VEI). We filtered our results using
simple liquidity criteria of share price > $3.00 and average volume > 100k
shares/day. When we looked at the stocks by composites score--which is made up of
valuation, p/e ratio, market cap, 1- month forecast return, and LTM return
(momentum)--the leader of the pack was Hershey Company (HSY).
Hershey is a leading snack food company and the largest North American
manufacturer of chocolate and non-chocolate confectionery products. Hershey
markets such well-known brands as Hershey's, Reese's, Hershey's Kisses, Kit Kat,
Almond Joy, Mounds, York, Jolly Rancher, Twizzlers, and Ice Breakers.
ValuEngine has issued a BUY recommendation for The Hershey Company.
Based on the information we have gathered and our resulting research, we feel that
The Hershey Company has the probability to OUTPERFORM average market
performance for the next year. The company exhibits ATTRACTIVE volatility, company
size and market valuation.
Based on available data as of Nov. 24, 2010, we believe that HSY should be
trading at $54.93. This makes HSY 14.98% undervalued. Fair Value indicates what we
believe the stock should be trading at today if the stock market were perfectly
efficient and everything traded at its true worth. For HSY, we base this on actual
earnings per share (EPS) for the previous four quarters of $2.56, forecasted EPS for the
next four quarters of $2.71, and correlations to the 30- year Treasury bond yield of
3.92%.
However, all may not be sweet for this stock. As commodity investors know,
there have been some real shenanigans going on with cocoa lately. Prices are high
for this important raw material and if current trends prevail, world consumption of
chocolate will outpace the supply of cocoa. High prices for chocolate's critical
ingredient may severely impact big producers like Hershey.
Subscribers can check out the latest figures on the Warren Resources from our
models HERE
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MARKET OVERVIEW
Summary of VE Stock Universe
Stocks Undervalued 54.98%
Stocks Overvalued 45.02%
Stocks Undervalued by 20% 25.32%
Stocks Overvalued by 20% 17.56%

SECTOR OVERVIEW
Sector Change MTD YTD Valuation Last 12- P/E
MReturn Ratio
Aerospace -0.09% -0.79% 16.37% 2.75% undervalued 25.57% 19.02
Auto-Tires-Trucks -2.32% 1.92% 39.73% 1.13% overvalued 43.96% 33.91
Basic Materials -1.64% 2.99% 22.97% 14.77% overvalued 56.68% 33.5
Business Services -1.20% 2.00% 6.86% 4.26% undervalued 17.21% 28.99
Computer and Technology -1.11% 1.68% 21.72% 3.11% undervalued 29.63% 39.89
Construction -1.52% 1.99% 0.66% 10.48% undervalued 2.87% 37.34
Consumer Discretionary -1.03% 1.87% 17.35% 4.36% undervalued 24.39% 30.21
Consumer Staples -1.43% 1.93% 6.53% 1.35% undervalued 15.05% 21.68
Finance -1.32% -0.67% 12.34% 0.42% undervalued 16.60% 29.35
Industrial Products -1.40% 1.86% 14.92% 0.70% undervalued 24.94% 26.87
Medical -1.02% 1.38% 10.29% 11.31% undervalued 15.74% 33.27
Multi-Sector Conglomerates -1.60% 1.37% 17.13% 4.29% overvalued 27.84% 32.23
Oils-Energy -1.47% 4.63% 11.27% 12.32% overvalued 40.24% 42.5
Retail-Wholesale -0.81% 3.54% 15.29% 0.54% overvalued 47.59% 25.57
Transportation -1.57% 0.06% 18.10% 0.67% overvalued 25.36% 39.2
Utilities -1.07% -0.04% 4.46% 0.37% undervalued 15.43% 27.09

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