Two things come to mind in Hallowe’en season if you’re an investor: candy and costumes. There’s little more left of the holiday festivity than dressing up in the latest gauche pop culture references and staples from past horror flicks – and all the parties held precisely to give the opportunity for doing so.
Just take a look at any random sampling of what the kids bring back in their pumpkins and pillowcases, and you’ve got most of the stock ideas you need: Hershey’s; Cadbury; Nestle; Tootsie Roll. Wrigley’s also commands massive candy market share, but they were acquired by Mars, Inc. in 2009.
What I like about all (but one) of the following stocks is that they pay dividends. And, for the most part, they are somewhat defensive, if not fully recession-proof stocks. Although junk food isn’t what you can call a “staple,” it is really cheap – and this helps it out when consumers are feeling stretched. Just think about it – it’s the whole reason McDonald’s continues to thrive.
Top 10 Chocolate, Gum, Costume and Candy Manufacturers and Retailers
Hershey’s (NYSE: HSY) – I’ve never liked Hershey bars themselves, but the company does have good brands like Reese’s Peanut Butter cups, Twizzlers, and Hershey’s Kisses. Headquartered in Hershey, PA. (USA). Market Cap: $8.6 billion. Yield: 3.13%
Cadbury Plc (NYSE: CBY) - Cadbury is a UK company that originated in Birmingham in 1824. Shares are traded as ADRs on the NYSE. With all due respect to the success of their company, they have built it on sub-par chocolate quality. Go here for the lower-end chocolate brands. After you’ve compared the taste with Lindt, and maybe Ghirardhelli, you’ll agree. Market Cap: $17.4 billion. Yield: 1.47%
Nestle SA (OTC: NSRGY) – Nestle is a European company based in Switzerland. The shares trade on the SIX Swiss Exchange, but you can get them in the U.S as ADRs on the OTC markets under NSRGY. Nestle doesn’t just make chocolate, either, it is a quintessential Swiss company, involved with dairy products, pharmaceuticals, and even pet care products. Dividends are only paid once a year, usually between April and June. Market Cap: $167.2 billion.
Mars Inc. – Perhaps I shouldn’t be listing this one, because you can’t actually invest in it. It’s a privately-held company. Yes, that surprised me, too. And since they’ve bought out Wrigley’s, that’s now private, as well. But since Mars is so big and predominant a candy brand, let’s look at all the products it owns which you now know you cannot invest in: Mars bars (obviously); Snickers; Dove chocolate; M&Ms; Juicy Fruit; Spearmint gum; Twix; Milky Way; 3 Musketeers; Extra; Orbit; Skittles; Starburst; Hubba-Bubba; Lifesavers and Combos (the cheese-filled pretzel snacks).
Tootsie Roll Industries (NYSE: TR) – Is this whole company seriously built around that one little Tootsie Roll? Nope. You’d be surprised at some of the other products they develop: Andes chocolate mints (these were always a Christmas staple) and Junior Mints (another favorite, especially at the theater!); the rest are really low-end kiddie candy products. Market Cap: $1.4 billion. Yield: 1.3%
PepsiCo (NYSE: PEP) – Unlike Coca-Cola, PepsiCo is about way more than beverages. They also own the Frito-Lays’ line of chips: Doritos, Lay’s, Tostitos, Sun Chips and Cheetos. Some of these are sure to line the trick or treat bags of kids all over Canada and the U.S. Market Cap: $94.4 billion. Yield: 2.95%
CVS Caremark Corp (NYSE: CVS) – Don’t forget all the places that sell most of the candy, chips and pop. Better known just as “CVS,” this small drugstore/supermarket doesn’t only sell Hallowe’en treats, but the costumes and other paraphernalia that go with Hallowe’en, too. Market Cap: $52.7 billion. Yield: 0.82%
Walgreen Company (NYSE: WAG) – Known simply as “Walgreen’s,” it is almost seemingly constantly packed with bags of mini bars, jumbo bars, lunch candies, and other combinations of sugar. When it’s not Hallowe’en season, the packaging changes, but the candy comes in a neverending supply. Market Cap: $38.5 billion. Yield: 1.41%
Target (NYSE: TGT) – We all shop at Target for something. Target has done a good job of marketing itself to fit within the lower prices niche while at the same time branding upward to give itself a sense of style. You can find all the usual candy goodies here, and of course all your favorite Hallowe’en decorations, too. Market Cap: $36.8 billion. Yield: 1.39%
Wal-Mart Stores Inc. (NYSE:) – Granted, stores like Target and Wal-Mart sell a much wider variety of goods even than CVS and Walgreens, so their share of profits from Hallowe’en alone is going to be limited. Nevertheless, these retailers are sure to see an uptick in holiday-related sales, too. Market Cap: $192.2 billion (that’s larger than the entire GDP of Singapore). Yield: 2.16%
Stocks For All Holiday Seasons
Most of these consumer discretionary stocks and retailers, of course, do well all year round. Isn’t it funny how there is at least one big candy-requisite holiday each fiscal quarter? Hmm. New Year’s, Valentine’s Day, Easter… maybe there’s a bit of promotional hiatus during the notoriously slow summer months… then things kick off again with back-to-school (back to eating junk food because students don’t cook on their own?), and, of course, Hallowe’en.
Are these sin stocks? Should you really be trying to “cash in” on something like Hallowe’en? (To set aside the whole financial question of risk, etc.)
Well, you or your children are probably participating in Hallowe’en on the consumer end anyway, you might as well get the benefits from owning on the producer’s side. You can pick individual companies’ stocks or you can look for consumer/retail/discretionary ETFs like those at iShares. Unfortunately there is no ETF solely composed of candy or holiday stocks, per se, that I know of.
Do your own research, but you can use this list as a guide. Check out the differences between each of the stocks and know your investment objectives. Pepsi and Coke may seem like similar products, but their companies and product line up are very different. Also, if you’re in it for the long term, you might come up with different readings of these stocks than if you are hoping to make some quick gains (in other words, don’t buy these stocks and expect them to shoot up two days before Hallowe’en or Christmas. It doesn’t quite work like that.)
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