Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, confectionery company Tootsie Roll Industries
With that in mind, let's take a closer look at Tootsie Roll and see what CAPS investors are saying about the stock right now.
Tootsie Roll facts
|Headquarters (founded)||Chicago (1896)|
|Market Cap||$1.5 billion|
|Trailing-12-Month Revenue||$537.3 million|
|Management||Chairman/CEO Melvin Gordon
President/COO Ellen Gordon
|Return on Equity (average, past 3 years)||7.6%|
|Cash/Debt||$79.4 million / $7.5 million|
Spangler Candy Company
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 39% of the 51 All-Star members who have rated Tootsie Roll believe the stock will underperform the S&P 500 going forward.
This is getting a little bit ridiculous isn't it? Tootsie Roll Industries is currently trading at 33x earnings and 22x cash flow and is continuing to trade higher.
For comparison, Chipotle Mexican Grill
is trading at 35x earnings and 27x cash flow. The main difference between the two however, is that Chipotle burritos are an actual growth story; Tootsie Rolls are not anymore. [Tootsie Roll] has barely managed 2% revenue growth over the last five years while watching its EPS [fall]. Meanwhile Chipotle is pumping out top and bottom line growth of at least 20% each year. (NYSE: CMG)
In a very similar case to [Hershey Company] I believe that too much "safe money" has been put on these companies as investors are looking to find recession proof holdings with a nice little dividend yield. At the end of the day however, a little bubble will still pop sooner or later and I believe that is what we are looking at here.
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Chipotle. Motley Fool newsletter services have recommended buying shares of Chipotle. Try any of our Foolish newsletter services free for 30 days.