Outlook Sweetening for Hershey's

Holiday shoppers may be stocking up on products from The Hershey Company (HSY), but it is the recent management makeover at the company that has Zacks senior consumer products analyst Steven Ralston, CFA reiterating his Buy recommendation on the shares this morning:

'The Hershey Trust is not satisfied with the company's recent results and has replaced eight Directors and the CEO. The new management team, led by David West, is expected to recharge growth at Hershey's in addition to continuing with the three-year Global Supply Chain transformation plan. The share repurchase plan continues with the incremental $250 million authorized in December 2006 by the Board.

'Since the stock is at the low end of its historical valuation range, Hershey's stock is attractive and remains rated a Buy. The stock is currently trading at the lower end of the five year P/E range at 18.0. Hershey's EPS growth should begin re-accelerating in mid-2008 by focusing on core products, introducing new products, reducing costs, and expanding operations overseas.

'Despite the recent earnings disappointments and reduced earnings guidance for 2007, the stock appears to be attractively valued at the current levels. The stock price target of $57.25 is based on a mid-range P/E multiple of 27 times our 2007 EPS estimate.'

Ultra Clean a Spiffy Growth Play

Semiconductor supplier Ultra Clean Holding, Inc. (UCTT) keeps its Buy recommendation from Zacks senior semiconductor industry analyst Ken Nagy, CFA.  His latest research report on the company supplies us with the details:

'Ultra Clean is a supplier of gas panels to semiconductor manufacturing OEMs. The company is expanding its product line to include frame assemblies, top plate assemblies and process modules.

'The Seiger acquisition is progressing seamlessly and the company is transitioning several product lines to Shanghai. This has the effect of diversifying the revenue base as well as growing margins. Consequently, we would recommend investing in shares of UCTT and are reiterating our Buy rating.

'The shares are currently trading at a 15.3x multiple of our fiscal 2008 EPS estimate. The company's diversification into non-gas panel revenue is encouraging. In the last three quarters, revenue and earnings rebounded sharply. We believe that the stock will trade above the current valuation metrics.