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 Ingredion Incorporated (NYSE:INGR) 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 close up of a baker stirring a bowl of flour and sugar in a bakery.
Ingredion Incorporated (NYSE:INGR)
Upside Potential: 21.84%
Number of Hedge Fund Holders: 36
Ingredion Incorporated (NYSE:INGR) is the world’s largest supplier of ingredient solutions, with a focus on biomaterials made from maize and other starch-based materials, sweeteners, and starches. The company is a major player in the changing sugar market, with a diverse clientele spanning sectors like food and beverage, medicines, and manufacturing.
Due to reduced maize prices, Ingredion Incorporated (NYSE:INGR)’s fourth-quarter net sales declined by 6%, amounting to $1.8 billion. Nonetheless, the company’s gross profit increased by 12%, indicating its flexibility in responding to market shifts. It reported a record gross profit of $1.8 billion and net sales of $7.4 billion for the full year. Its margins increased by 270 basis points to 24.1%. The company’s high-margin specialty ingredients business, which experienced a 5% year-over-year growth in adjusted operating income, was the main driver of these results.
Despite lower demand for particular sweeteners, Ingredion Incorporated (NYSE:INGR) has been able to stay profitable by modifying its pricing and controlling input costs. Due to successful contract renewals and operational savings, the company’s operating income increased by 25% in the U.S. and Canada, even though net sales decreased by 8%.
Furthermore, Ingredion Incorporated (NYSE:INGR)’s approach remains centered on innovation. Its new collaboration with Oobli aims to complement other natural sweeteners like stevia by introducing sweet proteins as a sugar substitute. Its continued investment in sugar substitutes has enhanced its ability to assist food and beverage industries in achieving cost-effectiveness and nutritional objectives.
Ingredion Incorporated (NYSE:INGR)’s excellent financial standing, organizational efficiency, and ongoing leadership in sugar reduction all contribute to its value as an investment. Focusing on future sugar solutions, Ingredion is well-positioned as one of the 7 best sugar stocks to buy according to analysts.
Overall, INGR ranks 1st on our list of best sugar stocks to buy according to analysts. While we acknowledge the potential of INGR, 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 INGR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.