TR

Tootsie Roll is a textbook quality-but-fully-priced name. FY2025 delivered record net income of $100M (+15.2%) on revenue of just $733M (+1.3%), with the MD&A confirming the top-line gain was driven 'primarily by price increases' rather than volume — and that 'customers and consumers became more resistant to higher prices,' a headwind on sales 'throughout 2025.' Revenue is still below the 2023 peak of $769M, so this is a low-single-digit grower in a mature confectionery category, not a compounder. The earnings beat the sales line because management restored margin: adjusted product COGS fell from 65.3% to 65.1% of sales, lifting net margin to 13.7% and ROE to a still-modest 10.6%.

The balance sheet is the standout and the reason to own rather than avoid. The 10-K reports aggregate cash, equivalents and investments of $613.7M against $941M of equity, with management describing 'no special financing arrangements or off-balance sheet special purpose entities' and dividends, buybacks and the $34.3M capex all 'financed from internal sources.' Effectively debt-free, self-funding, with a 30+ year track record of conservative stewardship. Current assets ($321M) dwarf current liabilities ($98.5M) for a 3.3x current ratio. This is a business that cannot get into trouble.