Brock Candy Looks Sweet

As a small-cap investor, money manager Tom Frank can't buy shares of giant mass-merchandiser Wal-Mart Stores. So he does the next best thing and looks for a company whose products land on Wal-Mart's shelves. But such a company should, of course, have attributes aside from the Wal-Mart factor. Recently, Frank, who runs the top-ranked Dreyfus 2000 Series Small Cap Fund, discovered Brock Candy, a maker of more than 65 varieties of candies, including peppermint and gummi candies.

Not only is Wal-Mart its biggest outlet--accounting for 25% of sales in 1992, up from 14% in 1991--but since 1987, Brock's sales have been double the industry average. Moreover, Brock has signed valuable contracts with Hershey Foods and Planters LifeSavers to produce gummi candies.

The surprise, says Frank, is that candy consumption is on the rise despite public concern over fat and cholesterol intake. He notes that U.S. candy and chocolate sales jumped from $5.5 billion in 1982 to $9.6 billion in 1991.

Shares of Brock, which went public on Mar. 12 at 14 a share, are cheap, says Frank, based on the average price-earnings ratio of 22 for other publicly traded candy companies. Looking at Frank's 1993 estimate of $1.10 a share, Brock is trading at a p-e of only 12.7. Frank sees sales rising to $100 million in fiscal 1993. He expects the stock to hit 25 over the next two years.