In this piece, we will take a look at the ten best sugar stocks to buy now. If you want to skip our industry analysis and head on to the top five stocks in this list, then take a look at the 5 Best Sugar Stocks to Buy Now.
While industries such as consumer technology and biotechnology offer investors the chance to make hefty returns on their investments through sharp price rises, others such as commodities offer investment security since their demand is less conducive to shocks from a negative macro environment.
One such commodity is sugar, which is used in a wide variety of confectionery products and as a standalone as well. This sector is thought to increase its output from October last year to the end of September 2022 by 5.1 million tons, fueled by growth in production in India, Thailand, and the European Union to mark a first annual increase after a consistent drop over the past three years.
Market research reports paint a positive picture for the sugar industry, with optimistic growth rates. A report from Markets Research Future estimates that the industrial sugar market will grow at a compounded annual growth rate (CAGR) of 5.6% from 2021 to 2027 and sit at an estimated worth of $63 billion by the end of the forecast period.
Another report, this time from Fortune Business Insights estimates that the same sector was worth $37.6 billion in 2021. Between then and 2029, it is expected to grow at a CAGR of 2.7% to sit at $47 billion by the end of 2029. This growth will take place after the market was disrupted due to the coronavirus pandemic, as supply chain shocks and a rising number of health concerns cut down global sugar intake and reduced overall supplies. Fortune Business Insights also believes that a rise in processed food and the demand for confectionaries globally will drive the industrial sugar market’s growth.
Finally, the imarc group takes a look at the volume of sugar that is expected to be shipped globally over the course of the next few years. It estimates that as 2021 came to an end, the global sugar market had shipped 185 million tons and this will grow at a 1.8% CAGR to reach 207 million tons by the end of 2027. In addition to the food and beverages industry, the market growth will also be driven by pharmaceuticals and skin care – with both finding unique uses for the sweet commodity.
Therefore, the sugar market will remain stable over the course of the next few years, which is standard as high growth rates are rarely expected from a commodity unless a promising new technological breakthrough takes place. Our list of companies for you today includes well known firms such as Bunge Limited (NYSE:BG), The Hershey Company (NYSE:HSY), and Mondelez International, Inc. (NASDAQ:MDLZ).
Photo by Victoria Priessnitz on Unsplash
Our Methodology
In order to pick the top sugar firms for you, we took a broad look at the industry to determine which companies are performing well financially, have a strong market performance, and are in tune with industry developments.
Best Sugar Stocks to Buy Now
10. Nestlé S.A. (OTCMKTS:NSRGY)
Number of Hedge Fund Holders: N/A
Nestlé S.A. (OTCMKTS:NSRGY) is one of the largest food and beverage companies in the world and also one of the oldest. The firm makes and sells a wide variety of sugary products such as cereals, ice creams, and chocolates. It is headquartered in Vevey, Switzerland.
Nestlé S.A. (OTCMKTS:NSRGY) is one of the most valuable brands in the world, and a 2021 estimate pegs the value of this brand alone at a whopping $20 billion. Despite the global economic turmoil, in the first half of 2022, Nestlé S.A. (OTCMKTS:NSRGY) managed to grow its sales by 6.9% in developed markets and by 10% in emerging markets. Another factor that indicates its ability to weather out macroeconomic storms is the fact that the firm is guiding an impressive 17% operating margin for this year, even as the costs of doing business surge globally. Nestlé S.A. (OTCMKTS:NSRGY)’s latest annual dividend is $2.97 per share for a trailing twelve month yield of 2.46%.
Societe Generale raised Nestlé S.A. (OTCMKTS:NSRGY)’s share price target to CHF 130 from CHF 123 in September 2022 and kept a Buy rating for the shares.
Along with The Hershey Company (NYSE:HSY), Bunge Limited (NYSE:BG), and Mondelez International, Inc. (NASDAQ:MDLZ), Nestlé S.A. (OTCMKTS:NSRGY) is a sugary stock you must take a look at.
9. Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF)
Number of Hedge Fund Holders: 1
Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) is a confectionary manufacturer and seller that is based out of Durango, Colorado, the United States. The company manufactures close to 400 different kinds of chocolate candies and it also makes and sells a host of varieties of caramel apples, ice cream, and other products.
Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) is one of the largest American confectionary franchisors, with more than 320 franchises in the country. It also has a large contracting manufacturing opportunity under its belt, as the latest statistics show that the firm is utilizing less than half of its 5.3 million pounds of production capacity.
Jim Simons’s Renaissance Technologies is the only Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) investor in our database. It has a $2.7 million stake that comes through 392,163 shares.
8. Cosan S.A. (NYSE:CSAN)
Number of Hedge Fund Holders: 3
Cosan S.A. (NYSE:CSAN) is a Brazilian company that is involved in the industrial use of sugar through manufacturing fuel. It also markets and sells sugar derivative products such as raw sugar, and the firm’s logistics segment is responsible for transporting several commodities, including sugar. Cosan S.A. (NYSE:CSAN) is headquartered in Sao Paulo, Brazil.
Cosan S.A. (NYSE:CSAN) saw an average 23% increase in realized sugar prices during its second fiscal quarter, and at the same time, the firm’s revenues also grew by 69%. In another important development, sugar revenues from Cosan S.A. (NYSE:CSAN)’s Raizen joint venture were also up by 163%. Finally, a 6.5X EBITDA multiple suggests that the firm’s shares are undervalued.
Out of these, Cosan S.A. (NYSE:CSAN)’s largest investor is Jim Simons’s Renaissance Technologies which owns 5.8 million shares that are worth $81 million.
7. Tootsie Roll Industries, Inc. (NYSE:TR)
Number of Hedge Fund Holders: 9
Tootsie Roll Industries, Inc. (NYSE:TR) is an American confectionary products manufacturer that sells these products in the U.S., Canada, Mexico, and other countries. Its products include apple pops, pops, candies, mints, bubble gums, and more. The firm is headquartered in Chicago, Illinois.
A key factor that makes Tootsie Roll Industries, Inc. (NYSE:TR) a strong defensive play is that the firm has outperformed the S&P 500 index in terms of the share price over the course of this year as its shares have dropped by a marginal 0.62% while the index has bled 15.2%. In the past 6 months, the stock is up 2%.
Its second quarter saw revenue grow by a strong 24% annually, which then enabled year to date revenue grow by another 29.9% annually. Tootsie Roll Industries, Inc. (NYSE:TR) also pays a 9 cent dividend for a 1% yield.
By the end of the second quarter of this year, nine of the 895 hedge funds polled by Insider Monkey had held a stake in Tootsie Roll Industries, Inc. (NYSE:TR).
Tootsie Roll Industries, Inc. (NYSE:TR)’s largest investor is Jim Simons’s Renaissance Technologies which owns 447,676 shares that are worth $15.8 million.
6. Adecoagro S.A. (NYSE:AGRO)
Number of Hedge Fund Holders: 14
Adecoagro S.A. (NYSE:AGRO) is an agricultural company headquartered in Luxembourg, Luxembourg. The firm is responsible for farming and harvesting a host of agricultural products such as sugar, wheat, corn, and peanuts. Adecoagro S.A. (NYSE:AGRO) transforms sugarcane into ethanol and sugar, and it also sells electricity.
Adecoagro S.A. (NYSE:AGRO) is one of the most stable companies out there, with its latest balance sheet showing a debt of a mere $1.8 million compared to the voluminous $2.9 billion in total assets. A discount rate of 6.7% combined with a 7x EBITDA growth puts its fair value share price at $37.4, which is significantly higher than the current share price of $8.96.
Insider Monkey’s 895 hedge fund survey for this year’s June quarter saw 14 as having held a stake in Adecoagro S.A. (NYSE:AGRO).
William Duhamel’s Route One Investment Company is Adecoagro S.A. (NYSE:AGRO)’s largest investor. It has a $121 million stake that comes through 14 million shares.
The Hershey Company (NYSE:HSY), Bunge Limited (NYSE:BG), and Mondelez International, Inc. (NASDAQ:MDLZ), are joined by Adecoagro S.A. (NYSE:AGRO) as one of the best sugar stocks in the industry.
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Disclosure: None. 10 Best Sugar Stocks to Buy Now is originally published on Insider Monkey.