Rocky Mountain's Decadent Quarter

A great investing idea, combined with the savory sweetness of chocolate, can't be beat. Maybe it doesn't get any better than Rocky Mountain Chocolate Factory (Nasdaq: RMCF  ) in this regard. That's right, you don't necessarily need to look to Hershey (NYSE: HSY  ) or Tootsie Roll (NYSE: TR  ) to get your confectionary fix. Rocky Mountain's been doing good business as of late, and the second quarter displays a continuance of such momentum.

Sales revenues increased 11% to $7.5 million. Net profit jumped 28% to $1.3 million. On a diluted per-share basis, Rocky Mountain came in at $0.20 -- this performance represents a bottom-line growth rate of 25%.

Like any investor, I'm pretty keen on double-digit appreciation. I'm also stoked that the company is on track to have between 35 and 40 new stores opened by the end of the fiscal year. Speaking about stores, it should be noted that comps weren't necessarily stellar -- a minuscule 1.6% increase in same-store sales at franchised locations was recorded. Management said that hot weather played a role and, although excuses are to be weighed carefully, I do actually buy it in this case. Last year, I covered Rocky Mountain's Q2 results and saw that the warm summer also caused a weak reporting period.

Rocky Mountain, like fellow confectioner Wrigley (NYSE: WWY  ) , is a cool dividend stock idea. In fact, the company recently raised its dividend. Sure, it only went from $0.095 per stub to $0.10, but believe it or not, that's a 5.3% increase. And this isn't an isolated event -- the company has been raising the amount, as it was only $0.09 last December. Plus, this was the 17th consecutive quarterly cash payout for the company.

The last few quarters have been quite solid for Rocky Mountain. And the Motley Fool CAPS investing community seems confident in this company's future (be sure to check CAPS out -- it's free, it's fun, and it's a great investment tool). I concur with this sentiment -- I like the numbers, I like the business (who doesn't like chocolate?), I like the 2.2% yield, and I like that management has backed up its prediction that earnings will grow this year by somewhere between 15% and 20%. Rocky Mountain could be a delicious treat for a well-diversified portfolio.

Want more sweet articles on Rocky Mountain Chocolate Factory? Help yourself:


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