We recently published a list of 7 Best Sugar Stocks to Buy According to Analysts. In this article, we are going to take a look at where Archer-Daniels-Midland Company (NYSE:ADM) stands against other best sugar stocks to buy according to analysts.
The global food and beverage sector depends heavily on the sugar industry, which supplies a vital component for everything, from packaged meals and drinks to confectionery products. While traditional sugar production has been a reliable source of income for many years, new developments in alternative sweeteners, regulatory restrictions, and consumer tastes have changed the market and created new avenues for expansion and investment.
The demand for sugar remains high despite fluctuations in the global supply. The most recent World Agricultural Supply and Demand Estimates (WASDE) study projects that reduced cane sugar yields will cause U.S. sugar output to drop to 14.39 million short tons in the 2024–2025 season. Similarly, Mexico’s sugar output forecast has been lowered, mostly because of lower harvest quantities and a slower rate of sucrose recovery. However, rising middle-class populations in developing nations, increasing consumption of processed foods, and the ongoing demand for sugar-based goods, all contribute to the world’s rising sugar consumption.
Nevertheless, conventional sugar production is no longer the only focus of the sugar industry. A shift is occurring as health-conscious consumers actively seek healthier alternatives. About 35% of all non-alcoholic beverage releases in the last year featured no-sugar or low-sugar formulations, according to a GlobalData report, indicating that sugar reduction claims have taken center stage in the beverage industry. Major food and beverage companies have been forced to diversify as a result of this change, looking into sugar substitutes and natural sweeteners. As a result, companies are keen to meet the changing demands of a more health-conscious population, which is leading to increased investment in the sugar sector.
Therefore, companies are coming up with innovative ideas and solutions in response to these shifts, such as plant-derived sugar substitutes or artificial sweeteners. Large multinational corporations are growing their lower-sugar product lines, indicating a more significant change in the sector.
In addition to food and beverages, sugarcane and sugar beets are essential to the biofuel sector. More than half of Brazil’s sugarcane harvest is used to produce ethanol, making it the world leader in sugar-based ethanol production. This need is only likely to increase in the years to come. Sugar is a renewable energy source that is becoming increasingly important as the ethanol industry grows. Hence, sugar is an essential part of the global economy, extending beyond food and beverages, as sugar compounds are utilized extensively in industrial, medicinal, and cosmetic products.
While certain companies integrate sugar-based components into a wider range of products, others make significant profits from conventional sugar production. Thus, selecting the correct stocks is essential for investors hoping to profit from the rapidly evolving sugar sector.
Methodology
To compile our list of the 7 Best Sugar Stocks to Buy, we first identified companies operating in the sugar industry, including those involved in sugar production, sweeteners, and sugar-related ingredients. We focused on stocks with strong market capitalization and a notable presence in the sector.
Next, we analyzed institutional interest by determining the number of hedge funds which hold a stake in the company, as of Q4 2024. Hedge fund ownership data was sourced from Insider Monkey’s hedge fund database, which tracks the activity of over 1,000 hedge funds. A higher number of hedge fund holders often indicates confidence in a company’s growth potential and stability.
To assess the potential upside, we gathered analyst forecasts from credible sources. The highest projected upside for each stock was taken into account to ensure an accurate representation of growth expectations. Finally, we ranked the stocks based on their potential upside in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A wheat field at sunset, showing the company’s commitment to agricultural commodities.
Archer-Daniels-Midland Company (NYSE:ADM)
Upside Potential: 12.80%
Number of Hedge Fund Holders: 38
Archer-Daniels-Midland Company (NYSE:ADM) has cemented its position as a major player in the sweetener and carbohydrate sectors. In 2024, the company’s Carbohydrate Solutions division, which produces glucose, high-fructose corn syrup, and other sweeteners, reported an operating profit of $1.4 billion. The company’s resilience and operational efficiency were highlighted by the strong margins and volumes in North America, which helped counterbalance the lower ethanol and co-product values in the EMEA (Europe, the Middle East, and Africa) region.
In its financial performance results for the year ended December 31, 2024, Archer-Daniels-Midland Company (NYSE:ADM) reported adjusted earnings per share (EPS) of $4.74 for the entire year, with its reported EPS at $3.65. Adjusted net earnings came to $2.3 billion, while net earnings stood at $1.8 billion. Growth in North America’s volumes and margins contributed to the improvements during the year, while weaker ethanol and by-product sales in EMEA offset the growth. Reaffirming its commitment to long-term stability, ADM announced a set of focused initiatives to further strengthen its financial position. These actions are expected to provide cost savings of $500 to $750 million over the next three to five years.
Furthermore, Archer-Daniels-Midland Company (NYSE:ADM) raised its quarterly dividend by 2% to $0.51 per share, demonstrating its commitment to shareholder value. Additionally, the company expanded its share repurchase program by 100 million shares over the following five years.
Archer-Daniels-Midland Company (NYSE:ADM)’s strategic objectives also demonstrate the company’s dedication to expanding its presence in the sugar and sweetener industry. A significant part of the company’s portfolio, the Starches & Sweeteners subsegment, reported a 1% increase in operating profit, indicating consistent demand for sugar-based ingredients, such as glucose and dextrose. Additionally, increased North American volumes and enhanced plant efficiencies contributed to a 3% improvement in operating profit for ADM’s Carbohydrate Solutions division in Q4. These outcomes highlight ADM’s ongoing emphasis on innovation and operational efficiencies.
Archer-Daniels-Midland Company (NYSE:ADM)’s dedication to sustainability was demonstrated when it received the 2025 BIG Innovation Award for its regenerative agriculture initiative. The company is positioned for future growth and efficiency through its investments in digitization and facility modernization.
Overall, ADM ranks 2nd on our list of best sugar stocks to buy according to analysts. While we acknowledge the potential of ADM, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ADM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.