6 Halloween Candy Stocks to Watch This Holiday Season
One of the most foolproof ways to make investments is to fill your portfolio with things you love. Beer lovers who like a Samuel Adams every now and then can make back their beer money by investing in SAM. If you know you're going to buy a new F-150 every few years, it's worth investing in Ford. Love gorging yourself on soda and chips while watching football every Sunday? You sound like a PepsiCo (PEP) and DirecTV (DTV) shareholder in waiting.
If you're resisting the urge to disconnect the doorbell, dim the lights and play dead this Halloween, chances are you'll be investing in candy of some sort. (Unless you're that weird pennies and raisins house. Don't be that house.) Since you're splurging on sugar anyway, it may be worth investing a little extra in the candy companies selling you the stuff.
We took around the market and found a handful of candy stocks worth considering:
Hershey's has been a pretty sweet deal for investors in the past half-decade or so. The Hershey, Pa.-maker of its namesake chocolate, Kisses, Reese's, Krackel and Mr. Goodbar has watched earnings grow over the past five years as share prices jumped more than 70%. That price is up more than 17% this year alone and has paid dividends of $1.52 a share and yielded about 2.2%.
The 2008 financial crisis and 2009 market collapse had just about no effect on the share price, but that doesn't mean Hershey doesn't have problems ahead. It's been racking up debt, has a long-term debt/equity ratio of 175% and its free cash flow is just about nonexistent. Neither issue has been a problem so far, but fattening up on this stock too much now could lead to some discomfort later.
Tootsie Roll (TR)
With a candy lineup that expands beyond Tootsie Rolls and Tootsie Pops to acquisitions such as Charleston Chew, Dubble Bubble Bubble Gum, Razzles, Dots, Junior Mints and Charms Blow Pops, Tootsie Roll is a bigger deal in the candy world than its tiny $1.5 billion market cap would suggest.
The best part? It's a mom and pop shop that wants nothing to do with the investment community. Ninety-two-year-old CEO Melvin Gordon has run the company for five decades. He and his 80-year-old wife Ellen have brushed off journalists and shunned earnings calls to maintain their control of the company and avoid takeover. Meanwhile, its share price has grown nearly 11% in the past year and sales have nearly doubled in the last two decades with very little help from advertising. It has increased its annual dividend payment for 47 years, but just 3% annually over the past five years despite low debt and a payout ratio of 41%.