Tag: TR

by Fred Fuld III

The demand for chocolate is currently on the rise. The global chocolate market is projected to grow at a CAGR of 4.98% from 2022 to 2029, reaching an estimated value of USD 67.88 billion by 2029.

There are a number of factors driving the growth of the chocolate market, including:

Increasing population growth and urbanization. The global population is expected to grow to 9.7 billion by 2050, and the majority of this growth will occur in urban areas. This will create a larger market for chocolate, as urban consumers are more likely to consume chocolate than rural consumers.

Rising incomes. As incomes rise, consumers are more likely to spend money on luxury goods, such as chocolate. This is especially true in developing countries, where the middle class is growing rapidly.

Increased awareness of the health benefits of chocolate. Chocolate has been shown to have a number of health benefits, such as reducing the risk of heart disease, stroke, and diabetes. This is leading to increased demand for chocolate, especially among health-conscious consumers.

Growing popularity of premium and dark chocolate. Premium and dark chocolate are becoming increasingly popular, as consumers are looking for more sophisticated and flavorful chocolate options. This is driving growth in the chocolate market, as these types of chocolate typically command a higher price than traditional milk chocolate.

Chocolate has been shown to have a number of health benefits, including:

Reduced risk of heart disease. The flavanols in chocolate can help to improve blood flow and reduce inflammation, which can help to protect against heart disease.

Lowered blood pressure. The flavanols in chocolate can also help to lower blood pressure, which is another risk factor for heart disease.

Reduced risk of stroke. Chocolate has been shown to reduce the risk of stroke, especially in women.

Improved blood sugar control. The flavanols in chocolate can help to improve insulin sensitivity, which can help to control blood sugar levels.

Reduced risk of type 2 diabetes. Chocolate has been shown to reduce the risk of type 2 diabetes, especially in women.

Improved cognitive function. The flavanols in chocolate can help to improve cognitive function, such as memory and attention.

Reduced risk of Alzheimer's disease and dementia. The flavanols in chocolate may help to protect against Alzheimer's disease and dementia.

Improved mood. Chocolate can help to improve mood, possibly due to its effects on the brain's serotonin levels.

Antioxidant protection. Chocolate is a good source of antioxidants, which can help to protect cells from damage.

It is important to note that these health benefits are only seen with dark chocolate, which contains a higher concentration of flavanols than milk chocolate. Additionally, the benefits are seen when chocolate is eaten in moderation.

So what chocolate stocks are available to investors?

Hershey Foods Corporation (HSY), commonly known as Hershey’s, is a well-known American chocolate company. Hershey’s was founded by Milton S. Hershey in 1894 in the town of Hershey, Pennsylvania, USA. Milton Hershey had previous experience in the caramel business but turned his attention to chocolate manufacturing.

In 1900, Hershey’s introduced its iconic product, the Hershey’s Milk Chocolate Bar, which quickly became popular among consumers. The company’s success was largely attributed to its use of fresh milk and other high-quality ingredients.
Hershey’s experienced significant expansion throughout the early 20th century.

Milton Hershey established a model town called Hershey, Pennsylvania, to house the company’s employees and their families. The town included amenities such as housing, schools, recreational facilities, and a theme park called Hersheypark.
During World War II, Hershey’s was commissioned by the U.S. government to produce ration bars for the military. These bars provided soldiers with a high-calorie and nutritious food source during combat.

In addition to the classic chocolate bars, Hershey’s expanded its product line to include various confectionery items. This included the introduction of Hershey’s Kisses in 1907, Reese’s Peanut Butter Cups in 1928, and Kit Kat bars in the United States in 1970 through a licensing agreement with Nestlé.

Hershey’s expanded its reach globally, establishing manufacturing facilities and acquiring confectionery companies in different countries. Today, Hershey’s products are available in various regions around the world.

Over the years, Hershey Foods Corporation has grown to become one of the largest chocolate and confectionery manufacturers in the United States and has built a strong brand recognized globally.

Hershey has a trailing price to earnings ratio of 32 and a forward P/E ratio of 25. Earnings per share growth for this year jumped by 44.6%. The stock pays a dividend of $4.14 per year, giving a yield of 1.59%.

Mondelez International (MDLZ) has a rich history in the chocolate industry. The company traces its roots back to 1903 when it was originally established as the National Biscuit Company [NBC] in the United States. NBC quickly gained recognition for its popular snack products, including cookies and crackers. Over the years, NBC expanded its product portfolio and became a leading player in the global food and beverage industry.

In 1923, NBC introduced its first chocolate product, the iconic Oreo cookie, which went on to become one of the company’s most beloved and successful brands. This marked NBC’s entry into the chocolate segment and set the stage for its future endeavors in the chocolate industry.

In 1969, NBC merged with another prominent food company, Kraft Foods, forming the conglomerate known as Kraft General Foods (KGF). This merger brought together two industry giants and further solidified their presence in the chocolate and snack market.

In 2000, KGF underwent a significant restructuring and rebranding. The company spun off its international snack and confectionery businesses, including its chocolate brands, into a separate entity called Kraft Foods Inc. This move aimed to enhance focus and drive growth in the respective product categories.

In 2012, Kraft Foods Inc. made another transformational change. It split into two independent companies: Kraft Foods Group, which focused on the North American grocery business, and Mondelez International, which took charge of the global snacks and confectionery portfolio, including its chocolate brands.

As a result, Mondelez International became a standalone company dedicated to delighting consumers with a wide range of chocolate products. The company’s chocolate portfolio includes well-known brands such as Cadbury, Milka, Toblerone, and Côte d’Or, among others.

This $100 billion market cap company trades at 26 times trailing earnings and 21 times forward earnings. Quarterly earnings growth year-over-year jumped 147.8% on a rise of 18.1% increase in quarterly sales over the same period. The stock pays a dividend yield of 2.09%.

Tootsie Roll Industries has a storied history in the chocolate industry, dating back to its inception in 1896. The company was founded by Leo Hirshfield, who initially started his confectionery business in New York City. While Tootsie Roll Industries is best known for its namesake candy, the Tootsie Roll, its involvement in the chocolate sector is significant.

In the early years, Tootsie Roll Industries primarily focused on producing hard candies. However, in 1907, the company introduced a breakthrough product that would shape its future—the Tootsie Roll. This chocolate-flavored taffy-like candy became an instant success, winning the hearts of consumers across the United States.

Building on the triumph of the Tootsie Roll, the company expanded its chocolate offerings with the introduction of Tootsie Pops in 1931. These lollipops, featuring a chewy Tootsie Roll center, quickly became a beloved treat and a staple of Tootsie Roll Industries’ product lineup.

Over the decades, Tootsie Roll Industries continued to innovate and expand its chocolate portfolio. In 1971, they introduced another iconic product, the Junior Mints. These creamy, chocolate-covered mints gained popularity and have remained a favorite movie theater snack ever since.

Tootsie Roll Industries further expanded its chocolate offerings through acquisitions. In 1993, the company acquired the Charms Company, known for its popular Charms Blow Pops, which combined fruit-flavored hard candy with a gum center. This acquisition strengthened Tootsie Roll Industries’ presence in the chocolate and confectionery market.

Today, Tootsie Roll Industries is a leading player in the chocolate and confectionery industry. In addition to the classic Tootsie Roll and Tootsie Pops, the company offers a diverse range of chocolate-based candies, including Dots, Andes, and Caramel Apple Pops, among others.

This $2.68 billion market cap stock trades at 34 times trailing earnings. Quarterly sales were up 15.3% over the same period last year, and earnings increase 12.8% over the same period. The company offers a yield of 0.97%.

The Rocky Mountain Chocolate Factory is a confectionery company founded in 1981 by Frank and Rosalie Crail in Durango, Colorado. Starting with their first store in an old house, they offered a variety of chocolates and confections. As their high-quality chocolates gained popularity, the company expanded rapidly and began opening franchise locations across the United States.

Rocky Mountain Chocolate Factory became known for its diverse range of chocolate products, including caramel apples, fudge, truffles, nut clusters, and chocolate-covered treats. They also introduced innovative creations like gourmet popcorn, chocolate-dipped strawberries, and custom gift baskets.

To further expand, Rocky Mountain Chocolate Factory adopted a franchise model, allowing individuals to open their own stores under the brand’s umbrella. This approach contributed to the company’s rapid growth and the establishment of numerous retail locations nationwide.

In addition to its success in the United States, Rocky Mountain Chocolate Factory ventured into international markets. It opened stores in Canada, the United Arab Emirates, South Korea, Japan, and other countries, expanding its reach and introducing its products to a global audience.

Throughout its history, Rocky Mountain Chocolate Factory has maintained a commitment to using premium ingredients and traditional chocolate-making techniques. The company focuses on handcrafting its chocolates in small batches to ensure freshness and superior taste.

Rocky Mountain Chocolate Factory’s dedication to quality and its unique offerings have earned it a loyal customer base and recognition within the confectionery industry. Its stores are often sought out by chocolate enthusiasts and tourists looking for delicious treats.

Today, the Rocky Mountain Chocolate Factory continues to thrive, offering a wide selection of chocolates and confections in its stores and franchises. Its commitment to quality, innovative products, and expansion efforts have made it a well-known name in the chocolate industry.

The company is currently generating negative earnings, but has a reasonable price to sales ratio of 1.10. Rocky Mountain is an extremely low cap company at $33 million, and should therefore be considered extremely speculative.

Overall, the future of the chocolate industry is marked by innovation, sustainability, and meeting evolving consumer demands. As companies continue to adapt to changing trends and invest in responsible practices, the chocolate industry is poised for continued growth and diversification.

Disclosure: Author didn’t own any of the above at the time the article was written.

by Nkem Iregbulem

Chocolate is one of the most popular foods in the world. Some of the most common types of chocolate we see are milk chocolate, dark chocolate, and white chocolate. Think you know everything there is to know about chocolate? Turns out that numerous studies have found that chocolate consumption may improve your health in a variety of ways. Chocolate may be more than just a sweet treat enjoyed around the world.

Last June, The Harvard Gazette reported on a recent study conducted by researchers in Denmark and at the Harvard T.H. Chan School of Public Health. The study was published in the journal Heart, and its participants were 55,502 men and women from the Danish Diet, Cancer, and Health Study. Researchers found an association between moderate chocolate consumption and a lower risk of atrial fibrillation, a type of irregular heartbeat. They also found that those who ate 2 to 6 one-ounce servings of chocolate per week had the lowest rate of atrial fibrillation. The chocolate consumed by participants contained relatively low levels of potentially protective ingredients, suggesting that even small doses of cocoa can go a long way in terms of possible health benefits.

A few months ago, another study found that the consumption of dark chocolate may reduce stress levels and inflammation and even boost memory, immunity, and mood. The researchers at Loma Linda University Adventist Health Sciences Centre who led this study suspect that cacao, an ingredient commonly found in dark chocolate, may be largely responsible for the candy’s potential to support cognitive, endocrine, and cardiovascular health. They suggest cacao’s protective power likely comes from the fact that that it is a great source of flavonoids, which are very potent antioxidants and anti-inflammatory agents.

Chocolate may boost not only your health but also your portfolio. You can choose from a variety of chocolate-related companies including Rocky Mountain Chocolate Factory Inc. (RMCF), The Hershey Co. (HSY), Mondelez International (MDLZ), Tootsie Roll Industries Inc. (TR), Nestle (NSRGY), and Lindt & Sprungli AG (LDSVF). The RMCF and MDLZ stocks are traded on the NASDAQ exchange, and the HSY and TR stocks are traded on the New York Stock Exchange. The NSRGY and LDSVF stocks are both traded over-the-counter.

Your first option is Rocky Mountain Chocolate Factory Inc, a company that manufactures chocolate candies and confectionery products. It operates in the United States, Japan, Canada, Philippines, South Korea, and the United Arab Emirates. The company’s business activity can be divided into a couple segments: Franchising, Manufacturing, Retail Stores, U-Swirl Operations, and Other segments. Its products include clusters, truffles, caramels, mints, and molded chocolates. Rocky Mountain Chocolate Factory Inc. has a small market cap of $64.7 million and pays a dividend yield of 4.26%. With a negative 3-year growth rate of -2.84%, the company has seen decreasing revenue values each fiscal year since 2015. Its stock has a price-to-sales ratio of 1.71 and a price-to-book ratio of 3.29. The stock also trades at 21.82 times trailing earnings.

A second option is The Hershey Co., one of the largest chocolate manufacturers in the world. The Hershey Company, headquartered in Hershey, Pennsylvania, controls around 45% of the domestic chocolate market. Its products are offered in about 80 countries including the United States, China, Brazil, India, and Mexico. The leading chocolate company sells chocolate, sweets, mints, and other snacks to its customers. The company has a market cap of $18.94 billion and pays a dividend yield of 2.92%, which has been decreasing since 2015. With a price-to-sales ratio of 2.56, its stock is slightly overpriced. The stock trades at 18.27 times trailing earnings and 16.89 times forward earnings. The company’s stock also has a high price-to-book ratio of 19.66. The Hershey’s revenues have been increasing each fiscal year since 2015, giving it a 3-year revenue growth rate of 0.42%

You may also want to consider Mondelez International, a confectionary, food, and beverage company based in Illinois. It manufactures chocolate, biscuits, gum, candy, beverages, cheese, and groceries. However, chocolate alone is responsible for about 30% of the company’s sales revenue. Its portfolio includes billion-dollar companies such as Chips Ahoy! and Oreo.The company has a nice market cap of $57.91 billion and pays a dividend yield of 2.17%. The company’s stock is slightly overpriced with a price-to-sales ratio of 2.30. It trades at 17.25 times trailing earnings and 16.03 times forward earnings. Its price-to-book ratio is 2.22. Mondelez International’s revenue has been decreasing each fiscal year since 2013 as the company faces a negative 3-year growth rate of -8.89%.

Another option is Tootsie Roll Industries Inc., a company that manufactures and sells candy to wholesale distributors and to retail stores. It candy products — many of which are chocolate-based — include Tootsie Rolls, Tootsie Pops, Junior Mints, Charms, Blow-Pops, and Dots. The company mainly operates in the United States, Canada, and Mexico, but over 90% of its sales comes from customers in the United States. The company has a market cap of $1.45 billion and pays a dividend yield of 1.21%. Its stock has a price-to-sales ratio of 3.72, making it somewhat overpriced. The stock trades at 24.25 times trailing earnings and has a price-to-book ratio of 1.60. Tootsie Roll’s revenue has been decreasing each fiscal year since 2014 as the company faces a negative 5-year growth rate of -1.14%.

Nestle is another well-known, chocolate-related powerhouse to consider. By sales, the Swiss company is the world’s largest food and beverage company. Brands such as Nestle, Nescafe, Perrier, Pure Life, and Purina are all part of the company’s product portfolio. Under these brands and various other brands, the company offers baby food, cereal, bottled water, coffee products, chocolate, frozen food, and confectionery products. The company has a large market cap of $231.56 billion and pays dividend yield of 3.18%, but this value has been decreasing each year since 2015. With a price-to-sales ratio of 2.59, the company’s stock is slightly overpriced. It trades at 31.28 times trailing earnings and 19.49 times forward earnings. The stock has a price-to-book ratio of 3.74. Nestle’s revenue has been increasing each fiscal year since 2015, giving it a 5-year growth rate of 0.04%.

You might also look at Lindt & Sprungli AG, a Swiss chocolatier and confectionery company that manufactures and sells premium chocolate products. It is best known for its chocolate truffles and chocolate bars. The company focuses its operation in developed markets in Europe and North America. Lindt & Sprungli AGoffers its products under brand names such as Lindt, Ghirardelli, Russell Stover, Whitman’s, Pangbourne, Caffarel, and Lindor. The company has a nice market cap of $7.55 billion and pays a dividend yield of 0.93%, which has been increasing each year since 2014. Its stock has a price-to-book ratio of 1.78 and an excellent price-to-sales ratio of 0.37. It trades at 3.30 times trailing earnings and 30.30 times forward earnings. Revenue has been increasing each fiscal year since 2011 as the company enjoys a 3-year revenue growth rate of 6.49%.

Turns out that chocolate may be beneficial in more ways than one. Beyond merely satisfying your sweet tooth, chocolate can better your health and sweeten your portfolio.

Disclosure: Author didn’t own any of these stocks at the time the article was written.