|December 17, 2014
The Iconic Stock I Want To Own Forever
By Josh Sparrow
I've done it. I've found a stock so impressive I actually want to own it forever.
It's not any of the usual suspects like Apple, Google, or Starbucks.
No, the company behind this brand traces its roots back 120 years to 1894. It made more than 3 billion units of its product for the military during World War II. Some of it was even sent to the moon with the Apollo astronauts.
It's one of the most storied, iconic brands in American history... and it holds a massive 44.5% share of its market to this very day.
Figured it out yet? Here's one more clue...
The company makes a product so addictive that its factories have to produce more than 80 million units every single day just to keep up with consumers' constant demand.
The products I'm talking about are those iconic Hershey's Kisses, and the company I want to hold forever is, of course, Hershey.
The Hershey Company (NYSE: HSY) is the leading manufacturer of chocolate and non-chocolate confectionary, as well as all chocolate-related grocery products in North America. Additionally, the company carries a strong international presence with operations in more than 90 countries worldwide.
Over its history, Hershey has developed an impressive array of products with more than 80 brands, including Reese's, Kit Kat, Twizzlers, Ice Breakers, and of course Hershey's Kisses. This has allowed the company to put a stranglehold on its industry, holding nearly half the current market share in the United States, versus just 1% for private label confectioners.
It's that type of brand recognition and market strength that has allowed Hershey to weather so many periods of market turmoil during the last century.
Just think -- Hershey has paid a dividend for 340 consecutive quarters. That means the company paid a dividend every quarter -- even during the Great Depression. And during the '08-'09 financial crisis, while many companies were slashing budgets or going bankrupt, Hershey actually increased revenue by over half a billion dollars and raised its dividend by 13%.
And Hershey never stays down for long. Take a look at how the stock has fared in the 5 years since the market crash...
For the record, I'm not the only one who's noticed the huge upside Hershey has to offer. In fact, my colleague Dave Forest included Hershey in his latest report "The 10 Best Stocks to Hold Forever." Here's an excerpt from Dave's report...
"Hershey's biggest asset and competitive advantage is its sterling brand name -- generations of consumers have continued to reach for Hershey's bars and Hershey's kisses over cheaper generic alternatives.
But Hershey isn't just a feel-good investment. The company's strategy is twofold: to achieve sustainable and predictable profitability in the North American market and to generate significant growth by rapidly expanding its international business."
As far as "sustainable and predictable" profits in North America go -- Hershey has that covered. The company boasts an impressive 11% net profit margin and has taken steps to improve that even further by meeting consumers' growing demand for "hand to mouth" products. The company recently introduced mini versions of the popular Reese's Pieces, Hershey's Drops and Rolo brands in 2010, 2011 and 2012, respectively.
Now Hershey looks to focus its attention on international expansion. In China for example -- Hershey's second largest market -- sales have jumped 84% in just the past 5 years. And last year, the company acquired one of China's most iconic confectionery brands, private-firm Shanghai Golden Monkey Food Co.
This will only allow Hershey to further expand its global economic moat, with the company now anticipating net sales in China to jump between 600% and 700% in the next 5 years.
Hershey has everything a stock can offer to earn you a lifetime of income and market-beating gains...
The company's iconic brands are an irreplaceable asset that no competitors can easily duplicate. And no matter how many cheaper alternatives there are, consumers will almost always choose the tried-and-true product that they have known for decades.
Warren Buffett called economic moats "essential for sustained success"... and Hershey's 44.5% market share is one of the widest economic moats you will find.
Companies able to create such a wide gap between themselves and their competitors are often highly-profitable and dominant firms. And that makes them some of the most worry-free investments on the market.
Hershey has increased its dividends steadily over the past 40 years, growing them at an annualized rate of nearly 8% for the past decade. And the company has vowed to "maintain at least a 50% dividend payout ratio over the long-term".
But the company also buys back a hefty portion of its stock, which rewards shareholders with an as a sort of "tax free" dividend. Hershey has purchased $543 million worth of its shares in the last 12 months and will look to further continue its share-buyback programs going forward.
Bottom line, Hershey boasts an iconic brand, a stranglehold on its industry and has provided shareholders with growing dividends for decades now. Investors looking for a stock worthy of being held forever need look no further than Hershey.
Note: Hershey is just one of my colleague Dave Forest's "10 Best Stocks to Hold Forever"... and the other nine are just as impressive. From a little-known investment crushing the market 6-to-1 to the world's most dominant Internet company, these are companies you can buy now and hold for the rest of your life. Dave recently gave a presentation on these world-dominating companies at St. Edward's University in Austin, Texas. To watch Dave's live presentation, simply click here.