In this article, we discuss the best sugar stocks to buy now based on hedge fund sentiment, analyst ratings and future growth catalysts. You can skip our detailed analysis of the sugar stocks and sugar industry and go directly to the 5 Best Sugar Stocks to Buy Now.
The sugar industry is dependent on several volatile factors. This makes investing in sugar stocks tricky. Sugar stocks are cyclic, depending mainly on the prices of sugar, which in turn depends on its production and supply.
However, sugar prices hit their four-year high a few weeks ago due to the supply issues in Brazil. According to a report, in 2020, sugar prices jumped 56% since 2017. Moreover, in the second quarter of 2021, retail sugar prices have gained their highest since 2012.
The U.S. is the fifth-largest sugar-producing country, following Brazil, India, China, and Thailand. According to Goldstein Research, the U.S. sugar market is expected to grow at a CAGR of 3.19% during 2019-2035. Moreover, the country is expected to produce 8.4 million tons of sugar in 2021 with larger output from cane and beet sugar. According to analysts, this signals considerable investment possibilities as prices are expected to stay elevated in the coming months as well.
According to a report, The Global Sugar Substitute Market is expected to grow at a CAGR of 6.3%, reaching $10.27 billion by 2026. The market was valued at $6.35 billion in 2018. Some of the notable companies producing sugar substitutes include Archer-Daniels-Midland Company (NYSE: ADM), Tate & Lyle Plc (LON: TATE), Ingredion Incorporated (NYSE: INGR), and Whole Earth Brands, Inc. (NASDAQ: FREE).
Our Methodology:
Let’s analyze our list of the best sugar stocks to buy now. We took into account hedge fund sentiments, analysts’ ratings, long-term growth potential, and fundamentals while choosing these stocks. The stocks listed below are sugar processing companies, food makers, especially confectioneries, and companies producing sugar substitutes.
Why pay attention to hedge fund sentiment while choosing stocks?
Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by wide margins. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Sugar Stocks to Buy Now
10. Tate & Lyle Plc (LON: TATE)
Number of Hedge Fund Holders: N/A
Tate & Lyle Plc (LON: TATE) is a British supplier of food and beverage ingredients to industrial markets. The company was originally a sugar refining business but transformed its business strategy to manufacture no-calorie and low-calorie sweeteners such as sucralose, Dolcia Prima, and Allulose. It ranks tenth on our list of the best sugar stocks to buy now.
In FY21, Tate & Lyle Plc (LON: TATE) reported revenue of £2.8 million, with sucralose accounting for £151 million of the gross revenue. The company helped remove 1.8 million tonnes of sugar from people’s diets through its sweeteners. At the end of FY21, Tate & Lyle Plc (LON: TATE) increased its annual dividend by 4% at 30.8p. During the year, the company also completed its acquisition of Sweet Green Fields, a global stevia ingredient company.
Like Archer-Daniels-Midland Company (NYSE: ADM), Bunge Limited (NYSE: BG), The Hershey Company (NYSE: HSY), Ingredion Incorporated (NYSE: INGR), Whole Earth Brands, Inc. (NASDAQ: FREE), and Seaboard Corporation (NYSE: SEB), Tate & Lyle Plc (LON: TATE) is one of the notable sugar stocks gaining investors’ attention in 2021.
9. Tootsie Roll Industries, Inc. (NYSE: TR)
Number of Hedge Fund Holders: 12
Tootsie Roll Industries, Inc. (NYSE: TR) is an American company that manufactures and sells some of the most popular confectionery brands. Today, it is regarded as one of the largest candy companies in the world, operating throughout North America and 75 countries. It ranks ninth on our list of the best sugar stocks to buy now.
In Q2 2021, Tootsie Roll Industries, Inc. (NYSE: TR) reported an 8% growth in net sales from second-quarter 2019 pre-Covid levels. The company posted revenue of $114.5 million, up from $79.7 million during the same period last year. Net earnings for the quarter stood at $9.79 million, compared with $7.38 million in the prior-year quarter. Tootsie Roll Industries, Inc. (NYSE: TR) attributed the successful quarter to the reopening of economies.
As of Q2 2021, 12 hedge funds tracked by Insider Monkey have positions in Tootsie Roll Industries, Inc. (NYSE: TR), worth over $29 million. Renaissance Technologies is the company’s largest shareholder with shares worth $13.3 million.
8. Seaboard Corporation (NYSE: SEB)
Number of Hedge Fund Holders: 13
Seaboard Corporation (NYSE: SEB) is a multinational agribusiness and transport company with operations in several industries. The company mainly engages in pork production, commodity merchandising, sugar production, and grain processing. Seaboard Corporation (NYSE: SEB) stands eighth on our list of the best sugar stocks to buy now.
In Q2 2021, Seaboard Corporation (NYSE: SEB) posted revenue of $2.43 billion, showcasing a 34.3% year-over-year growth. Seaboard Energías Renovables y Alimentos, Argentina’s largest sugar processing plant, supplies sugar to the retail market and has an annual capacity to produce approximately 250,000 metric tons of sugar. On August 13, Seaboard Corporation (NYSE: SEB) announced a quarterly dividend of $2.25 per share.
Third Avenue Management recently released its Q2 2021 investor letter and mentioned Seaboard Corporation (NYSE: SEB) in it. Here is what the firm has to say:
“The Fund’s compounder bucket includes companies such as Seaboard (conglomerate). We believe balance sheet strength and prudent capital allocation should allow these companies to compound NAV for many years to come. Financial services companies are roughly one third of the compounder category and are largely comprised of well-capitalized regional banks which make up 21% of the portfolio.”
7. Adecoagro S.A. (NYSE: AGRO)
Number of Hedge Fund Holders: 14
Adecoagro S.A. (NYSE: AGRO) is an agro-industrial company that manufactures and produces food and renewable energy. Along with this, the company also plants and processes sugarcane in its Angelica mill in Brazil. In 2019, Adecoagro S.A. (NYSE: AGRO) crushed 11 million tons of sugarcane which were used to produced 956,000 tons of organic sugar. The company ranks seventh on our list of the best sugar stocks to buy now.
In Q2 2021, Adecoagro S.A. (NYSE: AGRO) posted an EPS of -$0.12, in-line with the estimates. The revenue for the quarter stood at $278.8 million, presenting a 54% year-over-year growth. The sugar segment accounted for $73.5 million of the gross revenue. In the second quarter, Adecoagro S.A. (NYSE: AGRO) produced 196,218 tons of sugar whereas sugarcane yields reached 80 tons per hectare.
As of Q2 2021, 14 hedge funds tracked by Insider Monkey have positions in Adecoagro S.A. (NYSE: AGRO), worth $338.4 million. The number of hedge funds remained the same in the previous quarter with a total value of $242.1 million.
In addition to Archer-Daniels-Midland Company (NYSE: ADM), Bunge Limited (NYSE: BG), The Hershey Company (NYSE: HSY), Ingredion Incorporated (NYSE: INGR), Whole Earth Brands, Inc. (NASDAQ: FREE), and Seaboard Corporation (NYSE: SEB), analysts and investors are also paying attention to Adecoagro S.A. (NYSE: AGRO) amid the company’s long-term growth potential.
6. Wilmar International Limited (SGX: F34)
Number of Hedge Fund Holder: N/A
Wilmar International Limited (SGX: F34) is a Singaporean food processing company that also provides management services to its subsidiaries. The company’s operations involve oilseed crushing, sugar milling, and refining. It ranked 285th in Fortune Global 500 companies list in 2020. Wilmar International Limited (SGX: F34) is one of the top 10 sugar producers in the world, operating in multiple countries. It ranks sixth on our list of the best sugar stocks to buy now.
In Q2 2021, Wilmar International Limited (SGX: F34) posted revenue of $29.53 billion, up 30% from the prior-year quarter. The growth is driven by the better performance of Plantation & Sugar Milling segments and contributions from the joint ventures. According to the company’s CEO, the segment would benefit from the higher palm oil and sugar prices.
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Disclosure. None. Best Sugar Stocks to Buy Now is originally published on Insider Monkey.
