Call of the Week: A Brand for Sweet-Toothed Investors

In this week’s analysts meeting for Singular Research, we initiated coverage on Rocky Mountain Chocolate Factory, Inc. (RMCF), a highly regarded chocolate and confectionary retail brand. Despite its small national footprint, the company’s retail locations are very underpenetrated in the U.S., and it is diversifying its revenue base with frozen yogurt products and breaking into new international markets.

Some of the reasons why we like company’s potential include:

• Rocky Mountain Chocolate Factory is an international franchisor, chocolate and confectionery manufacturer, and retailer.

• The company is very underpenetrated in North America and has ample room for franchisee driven expansion.

• The company maintains a conservative balance sheet with solid working capital and no debt.

• The company has paid a dividend since 1988 and the current dividend yield is 4.0%.

• We forecast EPS of $0.72 in FY:13, growing to $0.88 in FY:14. Our 12-month price target is $14.00.

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