EP026: ($HSY) Hershey’s Sweet Comeback: Historic Cocoa Reversion to Boost Margins

Hershey’s stock presents a compelling investment opportunity as the company benefits from a significant reversal in cocoa prices. After a period where cocoa costs spiked fourfold, the current deflationary environment provides a powerful tailwind for gross margins. Because Hershey’s is well-hedged through 2027, the company can maintain elevated pricing, effectively harvesting margin expansion that exceeds consensus expectations. While consumer preferences have shifted toward non-chocolate items like gummies, the emergence of premium, high-priced "Dubai chocolate" is successfully drawing attention back to the category. Mark Rogers, a veteran hedge fund professional and founder of Heady Creek Research, projects 2026 earnings to exceed $9 per share, suggesting a fair value range between $270 and $285. This thesis relies on the sticky nature of pricing in a commodity-deflationary cycle, positioning Hershey’s for sustained growth despite broader market volatility.