Trüffelschwein
12.01.2001, 05:53
http://www.investorlinks.com/commentaries/momentum/01-01/12_mom_sh_x.htm
Investors Sweet on Tootsie Rolls
StockHouse.com
Columnist Scot Allyn, January 12, 2001
For investors feeling whipsawed by Wall Street gyrations, relief may be as close as their local candy counter. Tootsie Roll Industries (TR, Chart, Boards), makers of the famous confection enjoyed by children since the McKinley administration, is an old-fashioned value stock. With decades of revenue growth, cash dividends stretching back to the Second World War and recent acquisitions adding to profits, TR stock offers safety and reliable returns hard to find in the market today.
The chewy treat was born in a New York candy store in 1896 when Leo Hirshfield, a recent arrival from Austria, made the candies by hand from a recipe he brought from Europe. Originally priced at one cent, the same candy, still individually wrapped, can be bought today with the same penny (try naming another product available at the same price after 104 years). Now based in Chicago, the company has expanded its offerings since the 1931 introduction of Tootsie Pops, including the 1985 acquisition of Cella's Confections, which makes chocolate-covered cherries. The 1988 addition of Charms Co. added Blow Pops and Charms Pops to TR's offerings, making it the lollipop leader of the world. In 1993, the company bought Junior Mints, Sugar Daddy and Sugar Babies from Warner-Lambert. Most recently, TR acquired Andes Candies from privately held Brach's Confections in May 2000.
With 1999 sales of $396.8 million, TR is small potatoes compared to number-one candy maker Hershey Foods (HSY, Chart, Boards), with 1999 sales of $3.9 billion. Additionally, in terms of market cap, heavyweight Cadbury Schweppes Group (CSG, Chart, Boards) could gobble up TR like so many bonbons, with a cap of $13.1 billion versus the $2.3 billion in Tootsie Roll's cookie jar.
Yet Robert Schwarzkopf, Managing Director of Small Cap Equity at Kayne Anderson Rudnick, calls Tootsie Roll "a huge generator of cash flow." Kayne Anderson Rudnick is the largest institutional holder of TR, with over 1.35 million shares of the company in its Small Cap Fund and other private accounts. He explains, "You buy it (a Tootsie Roll) based on the brand name. That brand name has been established for well over a hundred years. The pricing power created through that brand name has created the most profitable food company in the world, period."
Results for the third quarter of 2000 are indeed encouraging, continuing the 23 years of sales growth of which the company is deservedly proud. Revenue of $165.9 million for the quarter shows a 9% gain over the same period a year earlier. Net income of $31.5 million is up 7.5%, and earnings per share are up 10%, to $0.64 from $0.58. This is the 18th straight year of earnings growth, longer than most tech companies have existed, much less produced a profit. In fact Tootsie Roll's EPS growth rate of 14.04% for the last five years is over double the 6.8% average of food processing companies.
"Strong cash flow supports a balance sheet historically devoid of debt and flush with liquidity."
In addition, the company's balance sheet reveals old-fashioned good business sense. Total debt-to-equity of 0.02 for the latest quarter shows how little TR has borrowed compared to its peers in food processing, who average 3.48. LJR Great Lakes Review analyst Elliott Schlang, in his May 16 report on TR, writes, "Strong cash flow supports a balance sheet historically devoid of debt and flush with liquidity." Rather than borrowing, he adds, the company "has relied on accumulated cash to fund most acquisitions and capital improvements."
And then there are the dividends. "Cash dividends have been paid," writes Schlang, "for 57 consecutive years, and have been compounding at 21% per year since 1995." Tootsie Roll also pays a stock dividend of 3%, in a program that automatically builds investors' portfolios. Every April for the last 35 years, the company has shipped three shares of stock to each holder of 100 shares. In the long term, shareholders see a handsome return. "We thought it was a chance to give back something," says Ellen Gordon, president and COO of TR, regarding the stock dividend. "Some of the individual shareholders really like it," she says, "they write us letters 'we sent our kids to college on it.'" It is a tradition Gordon says will continue.
Since the stock dividend tends to increase outstanding shares, the company has a share repurchase program. Thus 48.2 million shares outstanding in December 1997 grew to only 49.2 million in September 2000.
Tootsie Roll Chairman and CEO Melvin Gordon and his wife, President and COO Ellen Gordon, personify the kind of long-running endurance that has made their company a success. They have been married for fifty years, longer than Bill Gates, Jeff Bezos or Steve Case has been alive. If Tootsie Roll Industries seems like the company that time forgot, remember that its stock was up 43% for the year 2000, a period in which Microsoft, Amazon.com and America Online lost 62%, 82% and 60%, respectively. For a safe long-term investment, few stocks can match Tootsie Roll's.
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Contributed by StockHouse.com, and reprinted here with permission. Recently rated by Forbes to be among the best online sources for business news, StockHouse.com provides breaking news, original editorial, exclusive interviews and in-depth analysis from its offices in the U.S., Canada, Hong Kong, the UK, Singapore, Japan and Australia.
<IMG SRC="http://cchart.yimg.com/5y?tr,^ixic" border=0>
Das ist so ziemlich der ungünstigste Zeitraum für TR hinsichtlich des Vergleichs mit dem NASDAQ.
TR ist seit 1982 in einem Trendkanal, der eine Verdopplung alle 3.5 Jahre bedeutet (ca. 20% Jahresperformance).
Allerdings gibt es immer mal wieder 5-Jahreszeiträume, in denen wenig passiert. Wer die Wellen zu reiten weiß...
Für konservative Anleger eine Überlegung wert, wie ich finde. Gibt es die hier überhaupt? http://www.stock-channel.net/Board/smilies/wink.gif
Ciao, T.
Investors Sweet on Tootsie Rolls
StockHouse.com
Columnist Scot Allyn, January 12, 2001
For investors feeling whipsawed by Wall Street gyrations, relief may be as close as their local candy counter. Tootsie Roll Industries (TR, Chart, Boards), makers of the famous confection enjoyed by children since the McKinley administration, is an old-fashioned value stock. With decades of revenue growth, cash dividends stretching back to the Second World War and recent acquisitions adding to profits, TR stock offers safety and reliable returns hard to find in the market today.
The chewy treat was born in a New York candy store in 1896 when Leo Hirshfield, a recent arrival from Austria, made the candies by hand from a recipe he brought from Europe. Originally priced at one cent, the same candy, still individually wrapped, can be bought today with the same penny (try naming another product available at the same price after 104 years). Now based in Chicago, the company has expanded its offerings since the 1931 introduction of Tootsie Pops, including the 1985 acquisition of Cella's Confections, which makes chocolate-covered cherries. The 1988 addition of Charms Co. added Blow Pops and Charms Pops to TR's offerings, making it the lollipop leader of the world. In 1993, the company bought Junior Mints, Sugar Daddy and Sugar Babies from Warner-Lambert. Most recently, TR acquired Andes Candies from privately held Brach's Confections in May 2000.
With 1999 sales of $396.8 million, TR is small potatoes compared to number-one candy maker Hershey Foods (HSY, Chart, Boards), with 1999 sales of $3.9 billion. Additionally, in terms of market cap, heavyweight Cadbury Schweppes Group (CSG, Chart, Boards) could gobble up TR like so many bonbons, with a cap of $13.1 billion versus the $2.3 billion in Tootsie Roll's cookie jar.
Yet Robert Schwarzkopf, Managing Director of Small Cap Equity at Kayne Anderson Rudnick, calls Tootsie Roll "a huge generator of cash flow." Kayne Anderson Rudnick is the largest institutional holder of TR, with over 1.35 million shares of the company in its Small Cap Fund and other private accounts. He explains, "You buy it (a Tootsie Roll) based on the brand name. That brand name has been established for well over a hundred years. The pricing power created through that brand name has created the most profitable food company in the world, period."
Results for the third quarter of 2000 are indeed encouraging, continuing the 23 years of sales growth of which the company is deservedly proud. Revenue of $165.9 million for the quarter shows a 9% gain over the same period a year earlier. Net income of $31.5 million is up 7.5%, and earnings per share are up 10%, to $0.64 from $0.58. This is the 18th straight year of earnings growth, longer than most tech companies have existed, much less produced a profit. In fact Tootsie Roll's EPS growth rate of 14.04% for the last five years is over double the 6.8% average of food processing companies.
"Strong cash flow supports a balance sheet historically devoid of debt and flush with liquidity."
In addition, the company's balance sheet reveals old-fashioned good business sense. Total debt-to-equity of 0.02 for the latest quarter shows how little TR has borrowed compared to its peers in food processing, who average 3.48. LJR Great Lakes Review analyst Elliott Schlang, in his May 16 report on TR, writes, "Strong cash flow supports a balance sheet historically devoid of debt and flush with liquidity." Rather than borrowing, he adds, the company "has relied on accumulated cash to fund most acquisitions and capital improvements."
And then there are the dividends. "Cash dividends have been paid," writes Schlang, "for 57 consecutive years, and have been compounding at 21% per year since 1995." Tootsie Roll also pays a stock dividend of 3%, in a program that automatically builds investors' portfolios. Every April for the last 35 years, the company has shipped three shares of stock to each holder of 100 shares. In the long term, shareholders see a handsome return. "We thought it was a chance to give back something," says Ellen Gordon, president and COO of TR, regarding the stock dividend. "Some of the individual shareholders really like it," she says, "they write us letters 'we sent our kids to college on it.'" It is a tradition Gordon says will continue.
Since the stock dividend tends to increase outstanding shares, the company has a share repurchase program. Thus 48.2 million shares outstanding in December 1997 grew to only 49.2 million in September 2000.
Tootsie Roll Chairman and CEO Melvin Gordon and his wife, President and COO Ellen Gordon, personify the kind of long-running endurance that has made their company a success. They have been married for fifty years, longer than Bill Gates, Jeff Bezos or Steve Case has been alive. If Tootsie Roll Industries seems like the company that time forgot, remember that its stock was up 43% for the year 2000, a period in which Microsoft, Amazon.com and America Online lost 62%, 82% and 60%, respectively. For a safe long-term investment, few stocks can match Tootsie Roll's.
--------------------------------------------------------------------------------
Contributed by StockHouse.com, and reprinted here with permission. Recently rated by Forbes to be among the best online sources for business news, StockHouse.com provides breaking news, original editorial, exclusive interviews and in-depth analysis from its offices in the U.S., Canada, Hong Kong, the UK, Singapore, Japan and Australia.
<IMG SRC="http://cchart.yimg.com/5y?tr,^ixic" border=0>
Das ist so ziemlich der ungünstigste Zeitraum für TR hinsichtlich des Vergleichs mit dem NASDAQ.
TR ist seit 1982 in einem Trendkanal, der eine Verdopplung alle 3.5 Jahre bedeutet (ca. 20% Jahresperformance).
Allerdings gibt es immer mal wieder 5-Jahreszeiträume, in denen wenig passiert. Wer die Wellen zu reiten weiß...
Für konservative Anleger eine Überlegung wert, wie ich finde. Gibt es die hier überhaupt? http://www.stock-channel.net/Board/smilies/wink.gif
Ciao, T.