Markets

Insider Trading

Hedge Funds

Retirement

Opinion

Is Tootsie Roll Industries, Inc. (TR) the Best Chocolate Stock to Buy Now?

We recently compiled a list of the 10 Best Chocolate Stocks to Buy Now. In this article, we will look at where Tootsie Roll Industries, Inc. (NYSE:TR) ranks among the best chocolate stocks to buy now.

Chocolate is a sweet treat made from cocoa beans that are harvested, fermented, dried, roasted, and ground into cocoa mass, the core ingredient in chocolate. This mass then undergoes further processing to produce various types of chocolate.

The Confectionery Sector’s Performance

The confectionery sector saw a modest 3.74% year-to-date (YTD) increase compared to the broader market’s 18.13% rise. Rising input costs have driven up prices, particularly cocoa prices which have tripled in the past 12 months due to crop diseases in West Africa, which contributes around 80% of the world’s cocoa output, as reported by Food & Drink Digital. According to a report by J.P. Morgan, chocolate brands are grappling with higher cocoa costs (reached $10,000 per metric ton in March 2024) and are passing these increases on to consumers through price hikes. Ken Goldman, lead equity research analyst for U.S. Food Producers and Retailers at J.P. Morgan, made the following comment about this:

“In the U.S., Hershey has been very clear that list pricing is still one of the most important arrows in their quiver to offset inflation. Over the next year or two, they will probably pass on more cocoa inflation, and consumers will see higher prices for their chocolate as a result.”

The broader economic environment, including inflation and interest rates, also impacts consumer spending patterns, which further affects the confectionery sector. Increased prices in essential goods, such as food, can lead to reduced discretionary spending, impacting sectors like confectionery.

However, cocoa prices are expected to ease slightly in the medium term and may stabilize around $6,000 per metric ton. This could result from improved weather conditions and increased planting of cacao trees, which may provide some relief to the chocolate market.

The Chocolate Market Outlook

Despite the ongoing cost and pricing concerns, the global chocolate market has experienced significant growth, reaching an estimated $119.39 billion in 2023. According to Grand View Research, the market is projected to continue growing at a compound annual growth rate (CAGR) of 4.1% from 2024 to 2030.

According to a report by Dame Cacao, approximately 7.5 million metric tons of chocolate are consumed globally each year, equivalent to nearly 2.2 pounds (1 kg) of chocolate per person. The U.S. leads as the largest chocolate importer, with $955 million in chocolate-related imports in 2023, followed by France at $772.5 million during the same period, according to IndexBox. 

Rising Consumer Awareness in the Chocolate Industry

Consumer awareness is reshaping the chocolate industry, driving a surge in demand for specialty chocolates. In the National Confectioners Association’s State of Treating Report 2021, we find that there is a growing interest in organic, vegan, gluten-free, and sugar-free chocolates. Single-origin and bean-to-bar chocolates are gaining popularity for their distinctive flavors. Research highlights the health benefits of dark chocolate, including improved blood circulation and high flavonoid content, which further fuel its popularity.

Leveraging Chocolate as a Marketing Tool

In a competitive marketing landscape, chocolate is proving to be a powerful and versatile tool. Custom-branded chocolates not only create memorable experiences but they also enhance brand perception and boost client loyalty. Personalized chocolate gifts featuring logos or tailored messages offer a personal touch that fosters deeper connections. In addition, the visual appeal of chocolate makes it ideal for social media, driving engagement and brand visibility. This showcases chocolate’s powerful appeal to global consumer segments.

Methodology

For this list, we scanned Insider Monkey’s Q2 2024 database and selected companies involved in the chocolate industry, focusing on areas relevant to chocolate production and distribution. From that group, we picked 10 companies with strong balance sheets and solid financials and ranked them in ascending order of hedge funds having stakes in them.

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).

Tootsie Roll Industries, Inc. (NYSE:TR)

Number of Hedge Fund Holders: 8

Tootsie Roll Industries, Inc. (NYSE:TR) is a leading manufacturer and seller of popular confectionery products, including well-known brands such as Tootsie Roll, Tootsie Pop, Andes Mints, Junior Mints, and Charms Blow Pop. Operating as a single reportable segment, Tootsie Roll Industries distributes its wide array of chocolates and candies across the United States, Canada, Mexico, and various international markets. Through its Charleston Chew brand, it produces chocolate bars, rollers, and candies.

In Q2 2024, Tootsie Roll Industries, Inc. (NYSE:TR) reported net sales of $150.7 million, a 6% decline compared to the previous year. This drop was largely due to market challenges, customer resistance to price increases, and inventory adjustments that affected sales. Profit margins improved to 10%, up from 9.2%, driven by higher price realizations and operational efficiencies. Net earnings rose by 6.2% to $15.6 million, attributed to better pricing, improved manufacturing efficiencies, and favorable transport costs. Notably, cocoa and chocolate costs surged significantly in 2024, which is expected to impact margins in the second half of the year, which makes TR one of the best chocolate stocks on our list.

Tootsie Roll Industries, Inc. (NYSE:TR) maintained strong liquidity, supported by increased investment income and leasing revenue, contributing to higher net earnings. Although increasing input costs, especially for cocoa, present a challenge, the company remains committed to expanding its capacity and enhancing operational efficiencies to keep up with changing consumer demands.

Tootsie Roll’s stock has risen 12.47% in the past month and 0.20% YTD, supported by strong financials, including an 11% return on capital employed (ROCE) based on trailing twelve months to June 2024, in line with industry standards and reflecting a 37% growth over the past five years. With ongoing investments in manufacturing and capacity expansion, the company is well-positioned for future growth.

Consequently, as of Q2 2024, eight hedge funds, holding a combined investment of $25 million, are bullish on the stock, according to Insider Monkey’s database.

Overall TR ranks 9th on our list of the best chocolate stocks to buy now. While we acknowledge the potential of TR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

Disclosure: None. This article was originally published on Insider Monkey.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

The whispers are turning into roars.

Artificial intelligence isn’t science fiction anymore.

It’s the revolution reshaping every industry on the planet.

From driverless cars to medical breakthroughs, AI is on the cusp of a global explosion, and savvy investors stand to reap the rewards.

Here’s why this is the prime moment to jump on the AI bandwagon:

Exponential Growth on the Horizon: Forget linear growth – AI is poised for a hockey stick trajectory.

Imagine every sector, from healthcare to finance, infused with superhuman intelligence.

We’re talking disease prediction, hyper-personalized marketing, and automated logistics that streamline everything.

This isn’t a maybe – it’s an inevitability.

Early investors will be the ones positioned to ride the wave of this technological tsunami.

Ground Floor Opportunity: Remember the early days of the internet?

Those who saw the potential of tech giants back then are sitting pretty today.

AI is at a similar inflection point.

We’re not talking about established players – we’re talking about nimble startups with groundbreaking ideas and the potential to become the next Google or Amazon.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.

From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.

This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.

By investing in AI, you’re essentially backing the future.

The future is powered by artificial intelligence, and the time to invest is NOW.

Don’t be a spectator in this technological revolution.

Dive into the AI gold rush and watch your portfolio soar alongside the brightest minds of our generation.

This isn’t just about making money – it’s about being part of the future.

So, buckle up and get ready for the ride of your investment life!

Act Now and Unlock a Potential 10,000% Return: This AI Stock is a Diamond in the Rough (But Our Help is Key!)

The AI revolution is upon us, and savvy investors stand to make a fortune.

But with so many choices, how do you find the hidden gem – the company poised for explosive growth?

That’s where our expertise comes in.

We’ve got the answer, but there’s a twist…

Imagine an AI company so groundbreaking, so far ahead of the curve, that even if its stock price quadrupled today, it would still be considered ridiculously cheap.

That’s the potential you’re looking at. This isn’t just about a decent return – we’re talking about a 10,000% gain over the next decade!

Our research team has identified a hidden gem – an AI company with cutting-edge technology, massive potential, and a current stock price that screams opportunity.

This company boasts the most advanced technology in the AI sector, putting them leagues ahead of competitors.

It’s like having a race car on a go-kart track.

They have a strong possibility of cornering entire markets, becoming the undisputed leader in their field.

Here’s the catch (it’s a good one): To uncover this sleeping giant, you’ll need our exclusive intel.

We want to make sure none of our valued readers miss out on this groundbreaking opportunity!

That’s why we’re slashing the price of our Premium Readership Newsletter by a whopping 70%.

For a ridiculously low price of just $29.99, you can unlock a year’s worth of in-depth investment research and exclusive insights – that’s less than a single restaurant meal!

Here’s why this is a deal you can’t afford to pass up:

• Access to our Detailed Report on this Game-Changing AI Stock: Our in-depth report dives deep into our #1 AI stock’s groundbreaking technology and massive growth potential.

• 11 New Issues of Our Premium Readership Newsletter: You will also receive 11 new issues and at least one new stock pick per month from our monthly newsletter’s portfolio over the next 12 months. These stocks are handpicked by our research director, Dr. Inan Dogan.

• One free upcoming issue of our 70+ page Quarterly Newsletter: A value of $149

• Bonus Reports: Premium access to members-only fund manager video interviews

• Ad-Free Browsing: Enjoy a year of investment research free from distracting banner and pop-up ads, allowing you to focus on uncovering the next big opportunity.

• 30-Day Money-Back Guarantee:  If you’re not absolutely satisfied with our service, we’ll provide a full refund within 30 days, no questions asked.

 

Space is Limited! Only 1000 spots are available for this exclusive offer. Don’t let this chance slip away – subscribe to our Premium Readership Newsletter today and unlock the potential for a life-changing investment.

Here’s what to do next:

1. Head over to our website and subscribe to our Premium Readership Newsletter for just $29.99.

2. Enjoy a year of ad-free browsing, exclusive access to our in-depth report on the revolutionary AI company, and the upcoming issues of our Premium Readership Newsletter over the next 12 months.

3. Sit back, relax, and know that you’re backed by our ironclad 30-day money-back guarantee.

Don’t miss out on this incredible opportunity! Subscribe now and take control of your AI investment future!


No worries about auto-renewals! Our 30-Day Money-Back Guarantee applies whether you’re joining us for the first time or renewing your subscription a year later!

Trump’s $500B AI Investment: One Small Cap Stock With Big Potential in 2025

President Trump just announced a massive $500 billion investment into project “Stargate”, a joint venture between OpenAI, SoftBank, and Oracle to build artificial intelligence infrastructure within the United States over the next four years. (1)  The AI frenzy is in full swing, but beneath the surface lays one critical piece with a massive opportunity for investors reading this now: Copper.

What does Trump’s $500B investment into AI infrastructure have to do with copper one may ask? Every AI data center requires 60,000 pounds of copper – equivalent to 30 tons … With 100-150 grams of copper per Nividia H100, This represents a 4-6x increase over traditional data centers.

Analysts at Goldman Sachs predict “AI will add 1 million metric tons of annual copper demand by 2030”. (2) Compounding on top of the already crippling Copper Deficit, AI Data Centres are set to add another 1 Million tons to the projected 10 million ton supply deficit looming in 2030. With no major new copper mines being developed, and one of the world’s largest copper mines recently going out of production (First Quantum’s Cobre Panama mine) (3), BHP has warned of a “critically constrained” market. Bloomberg analysts forecast that copper prices could exceed $12,000 per ton as shortages intensify (4).

Click to continue reading…