Is Tootsie Roll fading?
Shares fall Monday and are down 11% in August. There are worries about its growth prospects and who will succeed its aging CEO and president.
Some of the decline was due to the overall stock market decline set off when Secretary of State John Kerry said the use of chemical weapons in attacks on civilians in Syria last week was undeniable.
But the stock was already off 5% when Kerry started to speak.
So what happened? There was no news from the company. It famously issues only the bare minimum of financial reports. It doesn't hold conference calls with analysts. It hasn't had any analyst coverage in two years.
But the stock did hit a 52-week high of $35.25 on Aug. 1 and has fallen 11% since. The Dow Jones Industrial Average ($INDU) is off 4.4% in the same time frame.
The stock was downgraded to sell last week by analyst Hunter Orr of Alpha Street Research, and there have been worries over the last year or so about its growth.
To be sure, Tootsie Roll has some of the best-known candy brands around, including Charms Blow Pops, Sugar Daddy caramels, Charleston Chews, Junior Mints, Dubble Bubble chewing gun, and Dots gumdrops.
Still, there are a number of uncertainties about the company.
The biggest is leadership and whether there's a succession plan. CEO Melvin Gordon is 93, the oldest CEO for a company listed on the New York Stock Exchange. His wife Ellen is the president. She's 83. Together, they control 46.8% of the class A shares and 82.2% of its class B shares.
There are some issues. Revenue of $544 million in the 12 months ended June 30 was off 5.7% from a year earlier. 2012 revenue of $549 million was up 3.3% from 2011. Earnings per share have been static since 2009.
The company faces ever stronger competition from Hershey (HSY), which has revenue of nearly $7 billion, and privately held M&M Mars (maker of M&Ms) and other confectioners.
And the stock has had a wildly volatile history. It hit $83.37 in 1993 and has $77.50 in 1998 but has been trading between $47 and $21 since 2000.
For the record, the Dow finished Monday down 64 points to 14,946. The Standard & Poor's 500 Index ($INX) was down 7 points to 1,657. The Nasdaq Composite Index ($COMPX) had higher for most of the day but ended down slightly at 3,658.
Syria was the biggest problem for the market. But a weaker-than-expected durable goods orders report also hurt.
Crude oil (-CL) in New York fell 50 cents to $105.92 Brent crude fell 31 cents to $110.73.
Gold (-GC) fell $2.70 to $1,393.10. Silver (-SI) rose 27.2 cents to $24.01. Gold is up 6.1% in August; silver is up 22.3%.
As my colleague Anthony Mirhaydari also noted, agricultural commodity prices jumped on Monday-- because of worries the farm harvests in the fall won't be as big as had been expected.
Tuesday brings the S&P/Case-Shiller Home Price Index and the Conference Board's August report on consumer confidence. Tiffany (TIF) and TIVO (TIVO) are among the corporate earnings reports due.
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So they had a bad day in the Markets, So what. Halloween is coming and there's always more Blow pops and Tootsie rolls in the bag than Hersey or Mars Bars. Charms Blow Pops, Sugar Daddy caramels, Charleston Chews, Junior Mints, Dubble Bubble chewing gun, and Dots gumdrops that looks like a list of some of the most popular Halloween candies. They might not be the biggest candy maker but they make some of the all time favorites. Wall Street only cares about money but when I buy candy at the store I've never seen a ticker there.
I LOVE TOOTSY ROLLS. I'VE BEEN EATING THEM FOR OVER 60 YEARS. I'M GETTING HUNGRY FOR ONE RIGHT NOW.
They are not going away. Worst case scenario another candy company would buy them for the brands they own.
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These hot movers could rise by double digits in coming months.
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