September 15, 2017

Ruby Returns from Barry Callebaut

A few days ago Dr. Hermann Stern heard that chocolate company Barry Callebaut is launching a new pink chocolate. They are calling it "ruby" or "rubin". It looks a bit like strawberry chocolate, but it doesn’t contain any additives, artificial or natural. The pink chocolate only contains a special kind of cocoa bean that is processed with a special technique.

That sounds innovative, he thought to himself, and he's already looking forward to the first bite. And he was very happy when Barry Callebaut appeared on his personal Top 10 list. It only contains stocks that a long-term investor from Switzerland can buy without hesitation. The stocks are from large companies in industries that are easy to understand, and that deserve their place on the stock market.

However, Barry Callebaut has a below-average Value Rating, which is the case for almost all Swiss companies today. The reason is that Swiss stocks are simply very expensive because they don’t contain a lot of substance. In case of Barry Callebaut, the big problem is the P/E Rank, which is the ratio of price and earnings. That means that the cost of the stock is much higher than its profits in comparison with other stocks in the same industry.

However, when looking at the innovative future of Barry Callebaut, this is understandable. Companies that invest in the future usually have smaller profits, which results in low P/E ratios. That’s why we always look at the other rankings as well.

In the end, Dr. Stern's buying shares of Barry Callebaut for 5,000 Swiss francs, which is only 3 shares. Apparently, they have done quite a few things right in the past.

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