The Hershey Company HSY has been undertaking buyouts to augment portfolio strength and boost revenues. The leading snacks company signed an agreement to acquire two production facilities from Weaver Popcorn Manufacturing — a well-known leader in popcorn production and co-packing and a co-manufacturer of HSY’s SkinnyPop brand. Per the deal, the company will acquire Weaver's operations in Bethlehem, PA and Whitestown, IN.

SkinnyPop has been witnessing impressive retail sales growth for ready-to-eat popcorn in the past three years. The move will likely help Hershey sustain its robust growth in the SkinnyPop brand through supply chain expansion. The buyout will solidify the brand’s internal supply chain capabilities and the network of strategic suppliers as well as co-manufacturers.

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Prudent Buyouts Driving Growth

Hershey is focusing on prudent buyouts to enhance its presence. In December 2021, the company acquired Dot’s Pretzels LLC — the owner of Dot’s Homestyle Pretzels — a leading brand in the pretzel category. The addition of Dot’s Pretzels is a perfect match for Hershey’s growing salty snacking portfolio. The company also purchased Pretzels Inc. from an affiliate of Peak Rock Capital. The acquisition further expands Hershey’s snacking and production capabilities. In the fourth quarter of 2022, Hershey’s net sales included a 3.6-point benefit from the Pretzels and Dot's buyouts.

On Jun 25, 2021, Hershey completed the acquisition of Lily's, a leading better-for-you (BFY) confectionery brand. The buyout syncs with the company’s focus to create an impressive BFY confection portfolio as part of its multi-pronged, better-for-you snacking strategy.

HSY has been investing in capacity expansion for largest and fastest-growing brands. At the end of 2022, the company announced three new projects, including a chocolate-making unit and line expansions in Hershey, Pennsylvania and at its Robinson, IL plant. Management expects these projects to come online in 2024. It anticipates capital expenditures to the tune of $800-$900 million in 2023, aimed at core confection capacity expansion and constant investments in digital infrastructure.

All said, the latest acquisition will continue to fortify Hershey’s position as a leading snacking powerhouse and providing greater flexibility, agility and resiliency in its salty snacks supply chain network.

The Zacks Rank #3 (Hold) stock has increased 19.9% in the past three months compared with the industry’s growth of 16.2%.

Solid Staple Bets

Some better-ranked consumer staple stocks are General Mills GIS, Beyond Meat BYND and Kimberly-Clark Corporation KMB.

General Mills, a branded consumer foods company, carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the corresponding year-ago reported figures.

Beyond Meat, which develops, manufactures, markets and sells plant-based meat products, currently carries a Zacks Rank #2. BYND has a trailing four-quarter negative earnings surprise of 29.3%, on average.

The Zacks Consensus Estimate for Beyond Meat’s current fiscal-year earnings suggests an increase of 39.7% from the year-ago reported number.

Kimberly-Clark is engaged in the manufacture and marketing of a wide range of consumer products around the world. It currently has a Zacks Rank of 2. KMB has a trailing four-quarter earnings surprise of 1.4%, on average.

The Zacks Consensus Estimate for Kimberly-Clark’s current financial year sales and earnings suggests growth of 1.7% and 5.2%, respectively, from the year-ago reported numbers.

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