It is the time of year when many of our thoughts turn to chocolate. The Halloween treats, the Thanksgiving presents and of course the delicacies on and around the Christmas tree.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Falling cocoa prices could also start to give a boost to some extremely sour stock prices amongst chocolate-making companies such as Mondelez International (MDLZ) and Hershey (HSY).
Cocoa Plunge
According to a report in Yahoo Finance, new analysis from the trading and investing platform eToro (ETOR) shows that cocoa prices have fallen 51% this year after years of surging input costs.
Cocoa’s price volatility has been driven by a series of issues, including harvest failures and export bottlenecks in West Africa, which have led to a 153% surge in the commodity’s price since 2020.
“Chocolate makers are finally getting some breathing space as cocoa prices fall,” said Sam North, market analyst at eToro.“Even after years of extreme cost pressure, the sector held up far better than expected. The data show that people may cut back on big luxuries, but they rarely give up small ones – and that’s helped keep chocolate stocks remarkably stable.”
Indeed, Mondelez, whose brands include Cadbury Dairy Milk and Daim bars, has seen its stock price fall by just 2% this year, with Hershey up over 2%.
“It reveals that chocolate makers have managed to effectively defend their margins through one of the most volatile commodity cycles in recent memory,” the article said.
Resilient Revenues
That has been less good news for chocolate fans who have suffered with rising prices in the shops. However, given its status as a treat and a balm to the occasional downsides of life, consumers have kept buying.
Hershey reported Q3 revenues of $3.18 billion, beating analyst expectations of $3.12 billion. Mondelez reported revenues for the same period of $9.74 billion beating forecasts of $9.68 billion.
Another factor weighing on the stock price has been President Trump’s tariffs adding more pressure to supply chain routes. That explains why the MDLZ share price is down nearly 15% over the last six months.
Hershey has warned that the tariffs could cost it more than $100 million this year alone.
But with trade deals being signed around the world and those lower cocoa prices perhaps there will be more optimism in the air this holiday season.
Is MDLZ a Good Stock to Buy Now?
On TipRanks, MDLZ has a Moderate Buy consensus based on 13 Buy and 5 Hold ratings. Its highest price target is $84. MDLZ stock’s consensus price target is $69.38 implying a 21.80% upside.
