How to Invest in Mars Stock

Mars has been a family-owned company for more than a century. The company started out selling candy and has since grown into one of the country's largest privately held companies.

Mars owns many well-known brands and operates four business units:

• Food: The company owns 13 leading food brands, led by Ben's Original.
• Pet care: Mars owns about 50 pet care brands, including Whiskas, Royal Canin, and Pedigrees. The company also owns Banfield Pet Hospitals and Veterinary Centers of America (VCA).
• Wrigley: With Warren Buffett's help, Mars bought iconic confectionary company Wrigley Co. for $23 billion in 2008 (and has since bought out Buffett's stake). It combined Wrigley with its legacy chocolate business, which got everything started more than a century ago. Today, Mars Wrigley owns several leading confectionery brands, including M&M's, Snickers, Twix, Skittles, and Mars.
• Edge: The company's newest segment is an entrepreneurial unit focused on improving human health.

Mars has long been a fiercely private company. However, that hasn't stopped investors from salivating at the prospect that it will eventually complete an initial public offering (IPO). Here's a closer look at what investors should know about this leading food, confectionery, and pet care company should it ever go public.

Publicly traded?

Is Mars publicly traded?

Mars is not a publicly traded company. It has been privately held by the Mars family since its founding by Franklin Mars in 1911.

Mars is one of the country's largest private companies. According to Forbes, Mars produced the fourth-highest revenue among private companies in 2023, at $47 billion.

When will Mars IPO?

When will Mars IPO?

Mars didn't have an IPO on the calendar as of early 2024. The company likely won't complete an IPO anytime soon. Mars has remained a privately held company for over a century, which seems likely to continue. The company has said it wants to remain family-owned and private because that allows it to pursue its growth strategy and invest for the long term without catering to outside shareholders.

How to buy

How to buy Mars stock

Mars is a private, family-owned company, so you can't buy shares in a brokerage account. You also can't buy shares on a secondary market for pre-IPO companies.

However, while you can't buy Mars stock, you can invest in stocks of similar companies. Here are three companies like Mars operating in the consumer discretionary industry.

The Hershey Company

Hershey (HSY -0.53%) shares many similarities with Mars. It also started making chocolate and sweets as a family company over a century ago. It has since grown into a large global snack company by launching new products and acquiring other brands.

Hershey's rings up more than $10 billion in revenue per year. It's also very profitable and generates excess cash, a portion of which it returns to investors via a steadily growing dividend.

Nestle

Swiss food and beverage company Nestle (NSRGY -0.09%) has over 2,000 brands across many categories, including chocolate and confectionery, drinks, and pet care. The company invests heavily in research and development (R&D) to create innovative new products.

It also routinely acquires brands to expand its reach. For instance, it bought a majority stake in a premium chocolate company in Brazil in 2023. The investments help increase Nestle's revenue and earnings so it can grow value for its shareholders.

Freshpet

Freshpet (FRPT 1.31%) makes fresh, real food for cats and dogs. It blends fresh meats, vegetables, and fruits it sources from local growers and prepares in small batches so the food retains its freshness.

The company generated over $550 million in sales through the first nine months of 2023, although it hasn't yet turned the corner on profitability. Freshpet is growing sales rapidly (almost 30% in 2023) while delivering narrower losses.

Investors who want to buy one of these Mars alternatives can purchase shares in any brokerage account. Here's a step-by-step guide on how to invest in stocks like Mars.

Step 1: Open a brokerage account

You'll need a brokerage account to start investing. If you need to open one, here are some of the best-rated brokers and trading platforms. Take your time to research the brokers to find the best one to meet your needs.

Step 2: Figure out your budget

Before making your first trade, you'll need to determine a budget for how much money you want to invest. You'll then want to decide how to allocate that money.

The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years. You don't have to buy all those stocks at once. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks. You can then grow your portfolio from there as you have more money to invest.

Step 3: Do your research

It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to make sure you have a solid grasp on whether the company can grow value for its shareholders over the long term.

Step 4: Place an order

Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:

• The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
• The stock ticker (HSY for Hershey, NSRGY for Nestle, and FRPT for Freshpet).
• Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.

Once you complete the order page, click to submit your trade and become a shareholder in one of these Mars alternatives. If Mars ever does complete an IPO, you'd follow a similar process to buy its stock if it went public. Should shares become available, fill out the order page at your brokerage account with Mars' selected stock ticker and then submit your trade.

Profitability

Is Mars profitable?

As a family-owned company, Mars doesn't need to disclose its financial results publicly, so we don't know exactly how much money it makes each year. However, we do know the company generates significant revenue. Mars reported more than $45 billion in sales in 2022, more revenue than beverage giant Coca-Cola (KO 0.0%) produced.

Meanwhile, we also know the company is solidly profitable. The company wrote about the role of profit on its website, stating: "The freedom of Mars depends on the creation of profit. Because Mars is profitable and generates cash, we need not borrow money to the extent that we might lose control over our affairs."

Mars' strong profitability is a big reason it has remained private throughout the years. It doesn't need capital from outside investors to fund its growth. The company highlighted this on its website:

"To this end, a substantial portion of operating profits is reinvested each year. This profit then provides the cash with which we can build and upgrade plants, enter new markets, invest in R&D, innovate and implement new ways of doing things, acquire new businesses and create strategic alliances, all to maintain our competitive position."

As long as Mars remains strongly profitable, it can stay private because it can fund its growth without needing additional capital from outside shareholders.

Should I invest?

Should I invest in Mars?

You can't invest in the family-owned Mars. Given the company's strong profitability, it may never go public. However, you can invest in companies benefiting from the same factors driving Mars' strong profitability.

Hershey's is a great alternative to consider. It holds the leading position in the U.S. confectionary market and is second in U.S. snacking. It's also solidly profitable and generates growing free cash flow. That gives Hershey's the cash to grow its business and return money to shareholders by repurchasing shares and paying a growing dividend.

The company sees more growth ahead, expecting to deliver 6% to 8% annual earnings-per-share growth over the long term. That should enable Hershey's to continue growing value for its shareholders.

ETF options

ETFs with exposure to Mars

Many investors would prefer to invest passively rather than actively manage a portfolio of stocks. Exchange-traded funds (ETFs) make that easy.

Unfortunately, Mars isn't a publicly traded company, so you can't get passive exposure to its stock through an ETF. However, you can invest in ETFs focused on food stocks to capitalize on the same trends driving Mars' growth. Some of the top food ETFs to consider are:

• First Trust Nasdaq Food & Beverage ETF (FTXG -0.47%): The ETF aims to provide investors with exposure to the U.S. food and beverage industry. It held shares of 29 companies in early 2024, including Hershey (the 14th-largest holding, at 3.6% of the fund's assets). This fund charges investors an ETF expense ratio of 0.6%.
• Invesco Food & Beverage ETF (PBJ 0.22%): This ETF also gives investors access to the U.S. food and beverage industry through a single fund. It held shares of 32 companies in early 2024, led by Kraft Heinz (KHC -0.55%) at 5.4% of its assets. This fund had a slightly lower total expense ratio of 0.57%.

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The bottom line on Mars

Mars is one of the largest privately held companies in the country. The family-owned confectionery and pet care company will likely remain private because it doesn't need outside capital, and the family doesn't want to cede control to outsiders.

While that means public investors can't own a piece of the company, there are several alternative ways to invest in the same trends that have enabled Mars to grow into a top company.

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