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This Tasty Firm is No Chocolate Teapot

By Malcolm Stacey | Wednesday 14 June 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Hello Share Snatchers. What is it about the taste of chocolate? I never met anyone who didn’t love the stuff. And I reckon it’s pretty addictive. Otherwise, why should we eat nearly the whole box once we taste the first choccy?

Which brings me to today’s selection: Hotel Chocolat (HOTC). This mouth-watering venture was launched on AIM just over a year ago at 148p a pop. The shares had almost doubled by the Autumn. As I write the price is around 350p.

The name is a bit misleading. It’s not a chain of hotels which serves up chocolate puddings and cocoa. It is, in fact, a chocolate bean grower, maker and retailer. And its headquarters are in paradise - well, St Lucia. It’s also moving into cafes.

I mention paradise because the plantation is in an exceptionally beautiful bit of the Caribbean. A pointed mountain rises steeply into the blue sky from a lush rain forest, like Bali-Hai in the musical South Pacific.

This is a chocolate company which grows its own beans. Most manufacturers and retailers don’t do this. Customers will expect that all-round process to give a better taste. As you might imagine, Hotel Chocolat had a very good Christmas. And it’s a dream company to have around at Easter.

It focuses its business on the UK, but is nibbling away at Denmark. Oh and it has a chocolate hotel, which sounds rather nice, in St Lucia.

Like the drinks firm Diageo (DGE) there’s a defensive element to buying its shares. Because in good times people will enjoy the luxury of chocolate. And if the economy turns nasty, they will turn to chocolate to cheer themselves up. Just like folk do with beer and whisky.

The company has plans to grow into other countries. It’s being said in the City that profit is set to grow by a third in 2017. Easy to say I know, but the projections seem that way. I am reminded of Fevertree (FEVR), the indy company that stormed the market for tonic water. Maybe Hotel Chocolat will be as successful.

Time to taste the Punter’s Return.

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