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Summary
- With Halloween just around the corner, let’s peek at candy and chocolate-related stocks like The Hershey Company (NYSE:HSY), Mondelez International (NASDAQ:MDLZ) and Tootsie Roll Industries Inc (NYSE:TR).
- The S&P GSCI Cocoa Index is down 1.69 per cent this year, while the S&P GSCI Agriculture Index grew 8.49 per cent year-to-date.
- As the coronavirus continues to lurk, health officials have urged Canadians to avoid trick-or-treating in COVID-19 hotspots and take extra care if dolling out candies or stepping out.
Though the year 2020 has been quite choked with horror overall, thanks to the COVID-19 pandemic, people are still looking forward to celebrating the special night designated to all things scary – Halloween. Just around the corner on Saturday, October 31, Halloween is also known for its ties to buying and eating candies in bulk. So, as we gear up for the celebrations, let’s dig into the bowl of candy and chocolate-related stocks such as The Hershey Company (NYSE:HSY, US:HSY), Mondelez International (NASDAQ: MDLZ, MDLZ:US) and Tootsie Roll Industries Inc (NYSE:TR, TR:US) to see how they have been doing this year. We’ll also glance at cocoa- focus iPath Bloomberg Cocoa Subindex Total Return ETN (NIB), but more on that later.
Halloween is a big day in Canada. According the 2016 Census of Agriculture, around 2,569 farms in the country that year grew pumpkin patches, a produce that is much popular for its use as Jack-O-Lanterns around this time. A Statistics Canada report said that the country saw a sale of about C$550.7 million in cookies, confections and snack foods around the Halloween season in 2017. While October 31 night has a reputation of being spooky, it generally has a lowered number of reported criminal incidents, as per another report by the central statistics agency.
However, with the ghost of the coronavirus still at our doors, this year’s Halloween is set to be different, just like Thanksgiving was. Business is still slow for most establishments and farmers continue to reel under the challenges of the pandemic, despite the holiday season.
The S&P Goldman Sachs Commodity Index (GSCI) Cocoa Index, which is a sub-index of the S&P GSCI, is down 1.69 per cent this year. The S&P GSCI Agriculture Index, on the other hand, registers a growth of 8.49 per cent year-to-date.
Speaking of cocoa and candies, here are a few stocks to look into around the Halloween season.
The Hershey Company (NYSE:HSY)
Current Stock Price: US$ 143.95
Shares of world-famous chocolate and candy maker The Hershey Company are trading flat year-to-date (YTD). The scrips plunged to its lowest level so far this year (US$ 110.17 on March 23) when the markets tanked during the onset of the pandemic in March. Since then, however, Hershey’s stocks rebounded nearly seven per cent in the last six months and about three per cents in a month.
Hershey’s recorded a 3.4 per cent year-over-year (YoY) decrease in its consolidated net sales of US$ 1,707.3 million in the second quarter ending 28 June 2020. Its reported net income of US$ 268.9 million was down nearly 13 per cent in Q2 2020.
Mondelez International (NASDAQ:MDLZ)
Current Stock Price: US$ 55.41
Chicago-based confectioner Mondelez International saw its stocks climb about eight per cent in the last six months. Despite their sharp fall amid the March lows, the scrips are up nearly two per cent this year.
Mondelez International saw its net revenues decrease 2.5 per cent YoY in its second quarter of 2020. Its gross profit was down US$ 138 million YoY, and its operating income was down about US$ 312 million YoY in Q2 2020.
Its year-to-date cash flow from operating activities posted a growth of US$ 0.5 billion YoY, amounting to US$ 1.6 billion, in Q2 2020. The company’s free cash flow of US$ 1.1 billion in the latest quarter was also up US$ 0.5 billion YoY.
Tootsie Roll Industries Inc (NYSE:TR)
Current Stock Price: US$ 30.62
Maker of the well-known Tootsie Rolls and Tootsie Pops candies, Tootsie Roll Industries saw a decline of about nine per cent in its stock price this year. The scrips dropped about 13 per cent in the last six months and about two per cent in three months.
The US$ 2-billion market cap company pays a quarterly dividend of US$ 0.09, which currently has a dividend yield of 1.178 per cent, as per the data on the TMX Group.
In the second quarter ending 30 June 2020, Tootsie Roll Industries recorded a 25 per cent YoY decrease in its net sales of US$ 79.7 million. Its net earnings of US$ 7.3 million were down 35 per cent YoY in Q2 2020.
There Are Also Cocoa ETFs…
The iPath Bloomberg Cocoa Subindex Total Return ETN (NIB) is an Exchange Traded Fund (ETF) dedicated to cocoa. It keeps a track of cocoa price through futures contracts and provides access to the Bloomberg Cocoa Subindex Total Return. The ETF’s current unit price stands at US$ 29.38 and has net asset worth US$ 21.56 million.
COVID & Canada
The federal and provincial governments have sounded alert amid the sudden surge of COVID cases across the country. The total number of confirmed cases touched 222,654, while death toll crossed 10,000 on Tuesday. While the country has not banned Halloween in the light of the pandemic, Prime Minister Justin Trudeau warned that if the cases continue to rise at the current space in winters, it will impact family gatherings during the upcoming holiday season.
Health officials have urged Canadians to avoid trick-or-treating in COVID-19 hotspots and to take extra care if dolling out candies to children. Since the celebration mostly sees children out on the streets, experts have recommended limiting curfews, maintaining social distance, keeping hand sanitizers handy, etc. And even if it is not a part of your costume, do don a proper mask!
