Hershey Co. (NYSE:HSY) recently sold $250 million 1.5% notes due Nov. 1, 2016. Standard & Poor's gave the notes an investment grade "A" rating because of its leading position within the U.S. chocolate and confectionary market. Prior to the offering, its long-term debt was $1.6 billion. It plans to use the proceeds for general corporate purposes. You must be doing something right when you can sell notes at such a low interest rate. Although its stock is trading near its 52-week high, this offering is one example of why investors should want to own its stock. I'll give you three more.

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Hershey Trust

One of the indirect benefits of investing in Hershey stock, is that 80% of the votes are held by the Milton Hershey School Trust and Hershey Trust Company. For those unfamiliar with the story, Milton Hershey and his wife, Catherine, couldn't have children, so they opened a school for underprivileged children in 1909. Today, approximately 1,800 students attend the school from pre-kindergarten up through grade 12. An equal number of boys and girls attend; all are given an opportunity their families couldn't afford. The profits it earns, from its ownership position in the company, are plowed back into maintaining the school. In 2002, the Hershey Trust explored selling its controlling stake in the company, in order to diversify its assets. Unfortunately, or fortunately depending on how you look at it, the trust's board rejected both a $12.5 billion cash and stock deal from Wrigley, and a $10.5 billion offer from Nestlé SA(OTCBB:NSRGY) and Cadbury. Nine years later, its enterprise value sits at $14 billion. Given its strong position within the chocolate marketplace in the U.S., any offer to the trust to sell at this point would have to be a substantial premium, given the political backlash the previous attempt engendered. Therefore, buy the stock now, and enjoy the $1.38 dividend until the trust tries again.

Kraft Foods

In August 2011, Kraft Foods (NYSE:KFT) announced it was splitting its business into two separate companies. The rationale behind this move is the incredible potential of its global snacks and confectionary businesses. While its North American grocery business is somewhat stagnant, it's Oreo and Cadbury brands are growing across the globe, and especially so in emerging markets. This tells me that Hershey is playing in the right sandbox.

Hershey and Peers -

Company

Hershey

10.81

Kraft

10.49

General Mills (NYSE:GIS)

10.64

Kellogg (NYSE:K)

9.68

H.J.Heinz (NYSE:HNZ)

10.81

International Expansion

Hershey's goal, to reach $1 billion in sales outside the U.S., is coming along better than expected. Its third quarter sales jumped 20%, internationally, with a focus on Mexico, China, Brazil and India. While it has a long way to go, to catch up to Kraft and Mars, it's progress nonetheless. If its business outside Canada and the U.S. continues at a growth rate of 20 to 25%, annually, there is a very real chance it will hit its objective before the 2015 deadline. If so, I estimate its international revenue will then represent approximately 15 to 17% of overall sales. Kraft, meanwhile, generated approximately 63% of its revenue outside the U.S. in the third quarter . I'm generally a positive thinker, and look at this situation as one of opportunity and not an impossibly large hill to climb. Hershey is a reasonably conservative company. It has forecasted 2012 revenue growth of 3 to 5% combined with a 6 to 8% increase in earnings. Barclays Capital analyst, Andrew Lazar, believes these numbers are, in fact, too low given its impressive top-line growth and impressive reinvestment in its business. Time will only tell, but it certainly should provide some comfort to investors who are unsure about a $57 entry point. (To know more about international expansion, read: Understanding BRIC Investments.)

The Bottom Line

Whenever I'm unsure about the price to pay for any stock, I always think back to the Warren Buffett line: "It's far better to buy a wonderful company at a fair price, than a fair company at a wonderful price." When you think of it this way, it should be an easy decision buying Hershey stock. It's a wonderful company trading at a fair, if not cheap price. (For additional reading, check out: Questions For Warren Buffett.)

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At the time of writing, Will Ashworth did not own shares in any of the companies mentioned in this article.

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