In this article, we will discuss: 12 Best Chocolate Stocks to Buy According to Hedge Funds.
According to a National Confectioners Association (NCA) survey, 95% of customers use chocolate and candies to celebrate the winter holidays. Sales of holiday confections hit $7 billion in 2023 and are predicted to increase by 3% in 2024. While 72% of Americans prefer chocolate or candies in stockings over gum, 56% of adults prefer giving and getting chocolate over wine. Sixty-four percent feed themselves more sweets, 60% bake holiday treats, and 70% use candy.
As per NCA CEO John Downs:
“Chocolate and candy are essential parts of the winter holidays.”
According to Global Market Insights, in 2024, the global chocolate industry was estimated to be worth $125 billion. From 2025 to 2034, it is expected to grow at a compound annual growth rate of nearly 3.3%. Consumer desire for indulgent products, premium offers, and health-conscious alternatives like dark and organic chocolate drives the global market.
There are a number of noteworthy trends in the chocolate industry, including customers’ growing preference for artisanal and premium chocolates. The U.S. Department of Agriculture (USDA) reports that the world consumed 5.05 billion metric tons of cocoa in 2022-2023, showing a rise in demand for high-end chocolate goods.
A few massive global companies control a large portion of the manufacture and distribution of chocolate and associated candies. The Mars family is the private owner of Mars, the biggest manufacturer of chocolate products and the company behind popular chocolates like Snickers and M&Ms.
Investors have found chocolate stocks to be an appealing investment since they have experienced financial gains. As of February 7, 2025, the broader market’s cocoa industry returned 86.69% in one year, 56.15% over three years, 28.19% over five years, and 13.71% over ten years.
According to the World Bank, concerns about new supply caused cocoa prices to rise again. In December, the price of cocoa increased by 30%, reaching an average of almost $10 per kilogram. Strong seasonal demand combined with worries about the unfavorable weather in West Africa caused this dramatic spike. According to estimates, the world’s cocoa production decreased by 14% during the 2023-24 season, from 4.9 million metric tons in 2022-2023 to 4.2 mmt. The main cause of this fall is the decreased production in Ghana and Côte d’Ivoire, which together account for around 60% of global cocoa production. As per the World Bank, the 2024-25 season is anticipated to see an improvement in supply conditions, especially in Côte d’Ivoire, where favorable weather across important growing regions could increase production by as much as 17 percent. Prices are expected to drop by about 13 percent in 2025 and another 2 percent in 2026 as more supplies hit the market, following an anticipated doubling in 2024. However, there is a considerable upside risk to prices because of the possible recurrence of unfavorable weather in West Africa.
Looking forward, according to JP Morgan’s report, the worldwide scarcity of supply and ongoing underinvestment in cocoa crops are two reasons driving up cocoa prices. Cocoa prices are expected to stay high in the medium term, circling about $6,000/tonne once a balanced market is achieved, despite expectations for a better crop in the 2024-2025 season. This could impact the chocolate industry, as confectionery costs are anticipated to rise by 2025.
Celine Pannuti, Head of European Staples & Beverages, J.P. Morgan, stated:
“Pricing has yet to pick up meaningfully, but we expect this to accelerate potentially to the low-teens in 2025. We see the chocolate market set for inflation largely unprecedented in recent history.”
With that said, here are the 12 Best Chocolate Stocks to Buy According to Hedge Funds.
A close-up of hands deftly moulding a bar of chocolate.
Methodology:
We sifted through holdings of chocolate ETFs and online rankings to form an initial list of 20 chocolate stocks. From the resultant dataset, we chose 12 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 900 hedge funds in Q3 2024 to gauge hedge fund sentiment for stocks. We have used the company’s market capitalization as of February 4 as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
12. Rocky Mountain Chocolate Factory Inc. (NASDAQ:RMCF)
Number of Hedge Fund Holders: 2
One of the Best Chocolate Stocks, Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF), is a confectionery and chocolate candy producer. The company operates through retail stores, manufacturing, franchising, U-Swirl operations, and other means. The company’s offerings include a range of clusters, truffles, caramels, creams, toffees, and mints.
In recognition of its operational efficiency and franchise strength, Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) was listed as one of the top 500 franchises in Entrepreneur’s Franchise 500 on January 27, 2025. Jeff Geygan, the interim CEO, attributed the success to the team’s commitment, franchise partners, and devoted clients. Jason Feifer, editor-in-chief of Entrepreneur, underlined the rating as a measure of perseverance and achievement in the franchise industry.
In Q3 of 2025, Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) announced a 3% YoY increase in revenue, hitting $7.9 million, up from $7.7 million the previous year. During the holiday season, e-commerce sales nearly tripled. In Chicago, Charleston, and Brandon, the company is growing by opening two additional locations and a kiosk as franchisees verify upgraded shop layouts and business plans. On January 6, a new ERP system was introduced with the goals of improving cost control, reducing errors, and offering real-time information. There was a notable improvement in holiday fulfillment, with almost all franchisee and specialized market demands being met. The leadership team has been strengthened as well by smart executive hires, such as a new VP of Franchise Business Support and VP of Marketing, who have positioned the business for long-term success.
Jim Simon’s Renaissance Technologies was the largest stakeholder in Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 316,979 shares worth $633,958 as of Q3.
11. Tootsie Roll Industries Inc. (NYSE:TR)
Number of Hedge Fund Holders: 11
One of the Best Chocolate Stocks, Tootsie Roll Industries, Inc. (NYSE:TR) was first introduced in 1896. Since then, it has expanded to become one of the biggest candy firms in the United States.
Leading confectionery manufacturer and retailer produces and distributes well-known brands such as Charms Blow Pop, Andes Mints, Junior Mints, Tootsie Roll, and Tootsie Pop. Tootsie Roll Industries, Inc. (NYSE:TR) distributes its wide variety of chocolates and candies throughout the US, Canada, and Mexico. It manufactures candies, rollers, and chocolate bars under the Charleston Chew brand.
Tootsie Roll Industries, Inc. (NYSE:TR) has iconic brands, a solid balance sheet with no long-term debt, and performs well during economic downturns. However, recently the company has continued reporting weak revenues as consumers are resisting price increases amid high-cost inflation for confectionary products.
In Q3 of 2024, the firm has instead chosen to prioritize maintaining margins. Tootsie Roll Industries, Inc. (NYSE:TR)’s profit margins have been safeguarded by the price hike. Operating cash flow has increased by 37.05% YoY, while the free cash flow grew by 55.04% YoY.
Despite the challenges posed by rising input costs, particularly for cocoa, the business is nonetheless dedicated to growing its capacity and improving operational efficiency to meet shifting consumer needs.
Jim Simon’s Renaissance Technologies was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 551,162 shares worth $17.06 million as of Q3.
10. The Simply Good Foods Company (NASDAQ:SMPL)
Number of Hedge Fund Holders: 26
Market cap as of February 4: $3.79 billion
One of the Best Chocolate Stocks, The Simply Good Foods Company (NASDAQ:SMPL) is a food and beverage company that sells consumer packaged goods. It specializes in low-carb, high-protein bars, shakes, and other products like confections, chips, and cookies under the Atkins and Quest brands. The business distributes its products through a variety of retail channels, mostly in North America, including mass, club, and grocery stores, as well as e-commerce and convenience stores. The majority of its revenue comes from North America.
Quest Nutrition introduced protein-rich chocolate brownies, blueberry muffins, and chocolate chip muffins as part of their new Quest Bake Shop collection last year. Quest is entering the bakery market for the first time with its new product line, which offers healthier options. In this manner, the business aims to attract the market niche that hunts for products that fulfill their protein needs while catering to their sweet tooth.
In Q1 2025, The Simply Good Foods Company (NASDAQ:SMPL)’s OWYN acquisition grew net sales by 10.6%, with excellent growth in both tracked and untracked channels, establishing it as a key growth driver. The company’s strong cash production, operational effectiveness, and strategic location in an expanding industry all point to potential long-term success.
Ave Maria Value Fund stated the following regarding The Simply Good Foods Company (NASDAQ:SMPL) in its Q3 2024 investor letter:
“The Simply Good Foods Company (NASDAQ:SMPL) is a fast-growing, small cap, consumer packaged goods company that utilizes an asset-light business model. The company began in 2016 with the acquisition by Conyers Park Acquisition Corp. of the Atkins branded line of nutritional snack products. Since 2016, Simply Good has made two other significant acquisitions both focused on the nutritional snacking space: 1) Quest – a healthy lifestyle food company offering a variety of protein bars, cookies, chips, ready-to-drink shakes and other snacks. Quest was acquired for $1B in August of 2019. 2) OWYN (Only What You Need) – a producer of plant-based, GMO free, gluten free, clean ingredient protein shakes. OWYN was acquired in April 2024 for $280M.”
TD Cowen increased The Simply Good Foods Company’s (NASDAQ:SMPL) price target from $34 to $36. The firm reiterated its 2025 guidance while acknowledging the reported mixed Q1 performance. Cowen still believes the company is in a good position to benefit from the mainstreaming of high-protein, low-carb, low-sugar foods.
