Gurus Trick-or-Treat with Thes – GuruFocus.com
As the spookiest night of the year approaches, investors may want to consider companies that are cashing in on the Halloween festivities.
The National Retail Federation predicts total Halloween spending, which covers the costs of candy, costumes, decorations and greeting cards, will hit a record $10.6 billion this year, up from $10.1 billion. dollars in 2021, even as the economy faces high and rising inflation. interest rate. Fall holiday celebrants are expected to spend an average of $100.45 each this year to get into the spirit.
While children and adults are eager to dress up and fetch candies and other treats, confectioners are among the businesses that will benefit the most. The NRF survey indicated that consumers will spend approximately $3.1 billion on candy this year.
The GuruFocus aggregated wallet, a premium feature based on 13F and NPORT-P repositories, found popular candy companies among gurus as of October 27 were Mondelez International Inc. (MDLZ, Financial), The Hershey Co. (HSY, Financial) and Tootsie Roll Industries Inc. (TR, Financial).
Investors should be aware that 13F and NPORT-P filings do not provide a complete picture of a company’s holdings as the reports only include its positions in US stocks and US certificates of deposit, but they can still provide valuable information. Additionally, reports only reflect trades and holdings as of the most recent portfolio deposit date, which may or may not be held by the reporting company today or even when this article was published.
With a combined equity portfolio weighting of 7.33%, 23 gurus are invested in Mondelez International (MDLZ, Financial).
The Deerfield, Illinois-based confectioner known for its Cadbury, Milka, Toblerone and Sour Patch Kids confectionery products, as well as Oreo cookies and Chips Ahoy, has a market capitalization of $83.06 billion; its shares were trading around $60.51 on Thursday with a price-to-earnings ratio of 22.03, a price-to-book ratio of 3.03 and a price-to-sales ratio of 2.83.
The GF value line suggests that the stock is currently slightly undervalued based on its historical ratios, past performance and analysts’ future earnings projections.
The GF score of 84 out of 100 indicates that the company has good potential for outperformance going forward. It received high ratings for profitability and momentum and medium ratings for growth, financial strength and GF value.
Although Mondelez has issued new long-term debt in recent years, it is at a manageable level due to adequate interest coverage. The Altman Z-Score of 2.55 indicates the company is under pressure. The return on invested capital slightly exceeds the weighted average cost of capital, meaning that value is created as the business grows.
The company is also supported by an expanding operating margin, strong returns on equity, assets and capital that outperform more than half of its competitors and a moderate Piotroski F-Score of 7 out of 9, meaning that the conditions are typical of a stable business. It also has a one out of five star predictability rating. According to research by GuruFocus, companies in this ranking have an average return of 1.1% per year over a 10-year period.
Among the gurus invested in Mondelez,
Diamond Hill Capital (Trades, Portfolio) holds the largest stake with 0.25% of its shares outstanding.
Jim Simons (Businesses, Portfolio)’ Renaissance Technologies,
Ray Dalio (Businesses, Portfolio) Bridgewater Associates and
Sarah Keterer (Trades, Portfolio) also have significant holdings. Gurus with smaller stances include
Mario Gabelli (Businesses, Portfolio),
Elfun Trusts (Businesses, Portfolio),
warren buffet (Businesses, Portfolio), the
T Rowe Price Equity Income Fund (Businesses, Portfolio), Hotchkis & Wiley and the
CI Select Canadian Equity Fund (Jobs, Portfolio).
Holding a combined portfolio weighting of 2.06%, nine gurus hold positions in Hershey (HSY, Financial).
Based in Hershey, Pennsylvania, the iconic company famous for its chocolate treats like Kisses, Reese’s Peanut Butter Cups, and Kit Kats, among others, has a market capitalization of $48.07 billion; its shares were trading around $234.63 on Thursday with a price-to-earnings ratio of 29.83, a price-to-book ratio of 16.63 and a price-to-sales ratio of 4.98.
According to the GF Value Line, the stock is currently slightly overvalued.
The company has good outperformance potential based on its GF score of 82, driven by high ratings for profitability and growth, medium ratings for financial strength, and low rankings for GF value and momentum.
Supported by a comfortable level of interest coverage, Hershey’s high Altman Z score of 5.61 indicates the company is in good standing, even as its assets accumulate at a faster rate than revenue growth. Moreover, the ROIC eclipses the WACC, so value creation occurs.
The company’s operating margin is expanding, while its returns outpace the majority of its industry peers. Hershey has a high Piotroski F-Score of 7, while steady earnings and revenue growth has contributed to a 3.5-star predictability ranking. GuruFocus found companies with this rank yield, on average, 9.3% per year.
With a 1.79% stake, Simons’ company is Hershey’s biggest guru shareholder. Other guru investors include Dalio’s company,
steven cohen (Businesses, Portfolio),
Jeremy Grantham (Businesses, Portfolio),
Baillie Gifford (Businesses, Portfolio),
Mayors and power (Businesses, Portfolio) and
Joel Greenblatt (Jobs, Portfolio).
Tootsie Roll Industries
Three gurus are invested in Tootsie Roll (TR, financial), representing a combined weight of 0.08%.
The Chicago-based maker of Tootsie Rolls, Tootsie Pops, Caramel Apple Pops, Dots, Junior Mints and Andes Chocolates has a market capitalization of $2.74 billion; its shares were trading around $39.01 on Thursday with a price-to-earnings ratio of 39.40, a price-to-book ratio of 3.50 and a price-to-sales ratio of 4.23.
Based on the GF value line, the stock appears to be fairly valued right now.
The GF score of 82 suggests that the company has good outperformance potential thanks to high ratings for profitability, financial strength and momentum, as well as moderate ratings for growth and GF value.
Although Tootsie Roll has issued new long-term debt over the past three years, it is still at a manageable level due to sufficient interest coverage. The robust Altman Z-Score of 8.37 indicates the company is in good standing. Also, ROIC eclipses WACC, so value is created.
Although margins are down, the company’s returns are superior to those of its competitors. Additionally, Tootsie Roll is backed by a high Piotroski F-Score of 7 as well as a one-star predictability ranking.
Simons’ company is the company’s largest guru shareholder with 0.65% of its shares outstanding. Gabelli and
Paul TudorJones (Trades, Portfolio) also have positions in Tootsie Roll.