Dear Mr. Berko,  I’m considering owning 100 shares of Hershey, even though my mom, who lives in Hershey, Pa., and has worked for Hershey since 1978, thinks it’s a bad company to own. I know she’s mad at Hershey because she didn’t get a raise more than 20 years ago when she thought she deserved it. What do you think?  W.T., Harrisburg, Pa.

Dear W.T.,  I think Mom holds a grudge for too long. I’m a Hershey Co. (HSY-$53.05) fanatic and I’ve been a HSY fanatic in each of my past incarnations when I discovered that drinking a cup of hot chocolate before dinner significantly diminishes my appetite. I grew up with a chocolate bar in my hand, in my pocket and in every lunch bag I carried to school. I ate so much chocolate in my youth that I enjoyed a year-round tan without spending hours in the sun.

Chocolate is also an aphrodisiac, and it seems that folks from Sudan to San Francisco can’t get enough of HSY’s ubiquitous, savorous, delectable, toothsome, gustable and ambrosial products. In fact, Hershey’s chocolates may be one of three government-approved consumables (along with alcohol and tobacco) that are addictive and don’t require a doctor’s prescription.

Hershey is a “wonder-word” like Kleenex, Jell-O, Coca-Cola, Cheerios and Nike. It’s a wonder-word that makes my soul salivate and helped my Individual Retirement Account appreciate. I bought 50 shares of HSY in February 1986 at $53 a share figuring I’d put my money where my mouth was. Today, after three splits, I own 600 shares and the stock is still $53 a share. And my 1986 dividend of 12 cents per share or $6 a year has morphed into 98 cents a share or $588 a year. How sweet it is!

This wonderful candy company also has marvelously capable management. In 1986, HSY’s net profit margins were 5.9 percent. In other words, every dollar of sales produced 5.9 cents in net income. Today HSY’s net profit margins are 12.4 percent, so each dollar of sales now brings 12.4 cents to the bottom line.

And HSY management won’t stop reducing costs. Management recently announced some cost-cutting measures that might increase its net profit margin to 14.5 percent in the next three years by consolidating operations, centralizing some purchases, closing a gum factory in the Philippines and reducing its salaried workforce by 5 percent.

In the process, HSY is rolling out new gustables plus different versions of its Kisses, Twizzlers, Reese’s, Jolly Rancher and Ice Breaker products. The addition of more single-serve packages might make margins more profitable while increasing revenues from convenience stores, where margins are higher. And, of course, its 2005 acquisitions of Joseph Schmidt Confections Inc. and Scharffen Berger Chocolate Maker Inc. provide HSY with a superb presence in the high-margin premium chocolate market.  Hershey is a $5.1 billion revenue company (revenues in 1986 were just under $2 billion) with 13,000 employees. It owns 44 percent of the U.S. chocolate candy business, (Mars is a distant second with 18 percent), with its Hershey and Reese’s products ranking as the most powerful brands in the chocolate confectionary market. Unlike its competitors, HSY eschews the use of brokers, preferring to manage its relationships with retailers via its own direct sales force, thereby lowering costs by 1.2 percent.

Because private-label brands have little penetration power and small advertising budgets, the company expects its revenues can now grow by 4 percent to 5 percent annually. Its iron-fisted pricing power should ensure continued robust cash flows and super profits for HSY stockholders.

This unexciting stock trades at 20 times this year’s expected earnings of $2.69 a share. It’s so unexciting that Vanguard, Putnam, Fidelity, Janus, Pioneer, Bessemer Group, Northern Trust, State Street, Davis and a few others own more than 70 million shares. Jeff Kleintop of PNC, which owns more than 1 million shares, thinks HSY can be a $70 stock in the next 18 months, and Richard Joy of Standard & Poor’s, who says it’s the “best story in the food industry,” rates HSY as a “strong buy.” Meanwhile, Terry Bivens of Bear Stearns and Ken Zaslow of Harris Nesbitt give HSY a five-star rating.

I agree with all these good fellows and also think HSY could be a $70 stock in the coming 18 months. Buy it.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.  © Copley News Service