Hershey Co (HSY), Tootsie Roll Industries, Inc. (TR): Sweetening the Pot with Candy Stocks

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Time-honored blue chips stocks with healthy track records can be found amongst candy companies. Although some cyclic behavior is to be expected as spikes are sure to be found around Easter, Valentine’s Day, and Christmas, candy stocks have shown steady growth and are not going to be subject to the volatility or sudden de-listings that happen to tech stocks. Here are a few choice morsels to sink your teeth into.


The Hershey Company (NYSE:HSY)

Perhaps the most iconic brand in candy history, Hershey Co (NYSE:HSY), is famous for Hershey’s Kisses, the “melt-in-your-mouth” Hershey Co (NYSE:HSY)’s bars (with and without almonds), and for the amusement park located in the town of Hershey, PA.  Although my Foolish compatriots have only seen fit to give this stock a CAPS rating of 3 out of 5, most of the comments on the company now are quite positive.  And if you take a close look at a two-year growth chart vs the S&P 500, you can see that Hershey Co (NYSE:HSY) has pretty consistently outperformed it.

A possible reason for the buoyancy in Hershey Co (NYSE:HSY)’s stock right now are the rumors of a merger between Hershey Co (NYSE:HSY) and Nestlé. Although the thought of a “Nestlé’s Kiss” makes my blood run cold, I have to admit that this would be one powerhouse of a combined company. Another Foolish blogger with an unknown source gave us this anonymous insight

“Nestlé wants to purchase Hershey for a number of reasons. The brand has a lot of recognition in North America, and is a dominator in that market. Owning them would help our company [Nestlé] expand in the confectionary market of North America. Also, the brand [Hershey] has been growing in China, and would also help us in that market.”, according to our source.

Even if this merger is just a sugar-coated dream, Hershey Co (NYSE:HSY) is a solid blue chip stock that is worthy of a position in even a highly-conservative portfolio.  From the earning’s report released on Apr. 25,2013, the company’s results were highly positive with these highlights:

Net sales increase 5.5% driven by volume

Earnings per share-diluted of $1.06 as reported and $1.09 adjusted

Outlook for 2013 net sales reaffirmed, earnings per share-diluted updated:

– Full year net sales expected to increase 5-7%, driven primarily by volume

– Reported earnings per share-diluted expected to be $3.52 to $3.58

– Adjusted earnings per share-diluted expected to increase about 12% and be in the $3.61 to $3.65 range


Another iconic brand, Swiss Nestlé is the creator of candy bars that most of us baby boomers grew up on, including O’Henry, Butterfinger, Nestlé Crunch, and Baby Ruth. (I’m actually having a really hard time continuing to write this without running to get one right now… I must keep the faith on the diet path.)

Fools love this stock – it has a CAPS rating of 5 out of 5 and the comments are mostly a virtual love fest (except, of course, for the Fools who still remember the baby formula scandal of the 80s). With a projected earnings growth of 7.1% over the next five years, a renewed strategy of sustainability, and rumors of a merger with Hershey, Nestlé is worth bagging. The company’s stock is also trading significantly below its 52-week high of $73.90. A possible dark cloud on the company’s future is the announcement that long-time CTO Werner Bauer is retiring. We Foolish investors can hope that the new “Willie Wonka” will have some of the same magic as Werner.

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