I last wrote about Tootsie Roll Industries (TR) over one year ago. I was very bearish at the time due to the overvaluation and declining top line. The stock price has barely budged since then and the stock is still overvalued but top line growth is now positive. Tootsie Roll exemplifies the saying that slow and steady also has its virtues. Tootsie Roll is one of the few stocks that is still up year-to-date with a gain of approximately 8.5% as of this writing. That is no mean feat as the stock market has been pummeled by the coronavirus-induced sell-off and oil price wars.
However, the stability of the stock price is a positive for those seeking less volatility and a very safe dividend yield of roughly 4%. Arguably, this stability is in part due to Tootsie Roll’s fortress balance sheet combined with a low float. The stock is a Dividend King having raised the dividend for 52 consecutive years. I am largely neutral on the stock, but it may interest small investors seeking income.
Overview Of Tootsie Roll
Tootsie Roll manufactures, distributes and markets candy and gum. The company has over a 100-year history and was founded in 1896. Besides its namesake brand of Tootsie Roll Candies and Pops, the company also sells Charleston Chew, Blow Pop, Andes, Jr. Mints, Dubble Bubble, Dots, Charms, and other brands. The company sells its products to retailers and distributors. Over 90% of sales are in the U.S. and the company also has operations in Canada, Mexico and Spain. Although the company is publicly traded, the Chairwoman and CEO Ellen R. Gordon effectively controls it through a dual-class share structure. She owns or controls approximately 53.9% of the common stock and about 82.8% of the Class B Shares. Revenue was roughly $527 million in fiscal 2019.
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