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Strategies & Market Trends : Young and Older Folk Portfolio
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To: Halfdave who wrote (313)9/14/2021 2:10:56 PM
From: chowder   of 21841
 
Re: HSY ... Valuation

HSY's current dividend yield of 2.07% is 10% below its 5-year average of 2.31%. While the stock may not be a very timely income opportunity due to its relatively low yield, HSY's valuation could be reasonable.

Specifically, HSY's forward P/E ratio of 23.9 is close to its 5-year average of 22.5. The market appears to be valuing the stock similarly to how it has in the past, suggesting that HSY could be fairly priced if you believe its long-term prospects remain solid.

Just be aware that HSY's forward P/E ratio is above the Consumer Staples sector average of 20.4. This usually happens if investors are optimistic about a firm's strong growth profile, superior business model, or the durability of its earnings stream. These qualities need to persist to continue justifying the stock's premium multiple.

It's worth mentioning that situations like these can also mean that a sizable dividend increase might be around the corner.

Source: Simply Safe Dividends

From my point of view, I look at the expected earnings growth and I see it's at 12%. This is a high growth rate for a consumer staple, and if earnings expectations are met, it lessens the odds of buying HSY at a discount in the near future. Thus, I plan on buying some tomorrow when I have more dividends hitting the account.
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