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TheStreet Open House

Google's KitKat Deal Lessons for Investors

Stocks in this article: GOOGHSYNSRGYMUMSFT

Unlike Micron, Hershey has been a great investment over the long run, although Micron has jumped almost 140% this year against Hershey's 20%. Since the market lows of late 2009 Hershey is up 153%.

Hershey revenue last year was $6.6 billion, of which it brought $661 million to the net income line, $2.89 per share. Investors are paying a premium P/E of 28.3 for those earnings, which is actually higher than Google's own 27. This might be due to Hershey's tasty dividend, 49 cents per share, giving a yield of 2.15%.

The nature of this deal does say something important, namely that we all look at investment through regional and industry blinders, which we shouldn't do.

Many investors also think of businesses like food as being a fairly staid, low-profit area, while in fact the profits can be fairly fat and the price paid for earnings higher than those of the biggest tech companies. Of all the companies mentioned in this article, the best investment over the last five years has been Hershey.

You can take a lesson from this. If you're a small investor, try a little more diversification, and don't assume that fast change means fat profits. Also be wary of buying Japanese KitKats for your kids, unless they really like red beans and wasabi.

At the time of publication the author held GOOG.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Dana Blankenhorn has been a business journalist since 1978, and a tech reporter since 1982. His specialty has been getting to the future ahead of the crowd, then leaving before success arrived. That meant covering the Internet in 1985, e-commerce in 1994, the Internet of Things in 2005, open source in 2005 and, since 2010, renewable energy. He has written for every medium from newspapers and magazines to Web sites, from books to blogs. He still seeks tomorrow from his Craftsman home in Atlanta.
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