The stock market may be uncertain, but too much sugar harms our health. However, you can still turn those unhealthy calories into money in your bank account. Sugar is everywhere around us every day and minute. It’s in our food, our cars, and many other places. As an investor, you can either buy the stocks of companies producing it, companies that add it to their products, ethanol companies, or invest directly into the commodity. In this article, we will explore all these very diverse options. Let’s begin.
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How to Invest in Sugar Stocks
The easiest way to invest in sugar stocks is with companies that process it and add it to their products. So many products out there need sugar to make their products appealing. Many companies can be found on the stock market. Let’s see those worth keeping an eye on.
1. The Hershey Company (NYSE: HSY)
If you bought chocolate or candy anytime, odds are you participated in Hershey’s massive growth. Back in 1894, the company began with one factory.
Today, Hershey’s 19 factories and 90 global brands bring more than $10B in annual revenue. Some of its iconic brands are Hershey’s, Kit Kat (U.S. only), Reese’s, Jolly Rancher and many more.
Early-day investors can’t complain about their returns. The company has grown over 10,000% since going public back in 1983. Furthermore, its dividends have increased yearly since the 2008 financial crisis.
It stands today at 1.77%. Since 2010, Hershey’s revenue has doubled and isn’t showing any sign of slowing down. This makes it an excellent sugar stock investment.
Mondelez ($MDLZ) TipRanks Stock Forecast Report 3/24
2. Mondelez International (NASDAQ: MDLZ)
Mondelez has a very diverse portfolio of brands that can be found globally. The company produces cookies, chocolate, gum, candy, and many other products. As a result, it’s a part of our sugar stocks list.
Its most popular products are Sour Patch Kids, Trident, Cadbury, Chips Ahoy, Oreo, 7days, Cadbury, Halls, Milka, Philadelphia, Ritz, Stride, and Toblerone. No wonder Mondelez is worth twice as much as Hershey’s!
Similarly to Hershey’s, Mondelez shareholders have been spoiled. Since 2017, its dividend increased by 46% to 2.13%. As for revenue, it hasn’t grown consistently but has nonetheless delivered strong results. Its management expects global sales to keep increasing and has sent a positive message to its shareholders. Keep an eye on Mondelez.
3. Nestlé (OTC: NSRGY)
Lastly, in this sugar stocks category, we turn our eye to the number one food and beverage company in the world, Nestlé. The company produces more than 2000 products, and many of them are unrelated to the sugar industry.
Nestlé water and its affiliates, Kit Kat (outside the U.S.), Smarties, Nesquik, Nescafé, Nespresso, Haagen-Dazs ice cream, and many more are some of its most popular products.
You can still purchase Nestle’s stock on the OTC exchange despite being a Swiss company. The company’s growth has slowed recently, but its shareholders haven’t abandoned ship.
Nestlé has also had issues in the public eye with tons of controversy regarding its pollution and water production practices. If you are willing to close your eyes to its practices, Nestlé remains a solid stock to consider.
Ethanol Sugar Stocks
What does ethanol have to do with sugar? Sugarcane is used to produce ethanol. I won’t describe the process, but you can see how sugar is also a big part of biofuel and a huge threat to the oil industry. Although the demand is slowly growing, some companies heavily invest in it.
1. Cosan (NYSE: CSAN)
Cosan is a Brazilian company that is a major producer of sugarcane ethanol and the largest sugar exporter in the world. The company also partners with the multinational oil and gas producer Shell (NYSE: SHEL). Overall, Cosan is very involved in the sugar industry as a producer, distributor, and logistics company.
However, Cosan remains a Brazilian company. Despite being an emerging market, Brazil isn’t known to be the stable and most transparent country in the world.
Furthermore, Cosan’s numbers haven’t been consistent returns in the last decade. There isn’t a clear pattern of growth. Hence, this is a risky investment but with a lot of upside.
2. Valero Energy Corporation (NYSE: VLO)
On the complete opposite spectrum from Cosan, we find Valero. The company is a leading producer and manufacturer of oil products in the U.S. and the second-largest ethanol producer in the world. Thanks to its 12 plants and 1.6B gallons of ethanol per year, Valero is well-positioned to be a global leader in the industry.
Thanks to its diversification in the fuel industry, Valero’s stock has grown significantly. Its investors have also been well-rewarded with a 3.25% dividend yield. Can Valero grow as a green fuel producer and keep rewarding its investors?
Commodities and Sugar Stocks
Commodities are an extra layer of diversification for your portfolio, but they come with another layer of complexity. Before trading commodities, make sure your broker supports those transactions. Interactive Brokers, eToro, and TD Ameritrade are the most popular brokers supporting commodities trading.
Stock Signals & Alerts
Sugar Stock Futures
There is always a benchmark quantity and quality to trade any commodity. For sugar, it is 112,000 pounds of world sugar #11 (raw cane sugar). It can be found on the New York Mercantile Exchange (NYMEX), which is part of the Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE). Its current price is near the 10-year high and has grown tremendously since 2020.
Some futures contracts expire weekly, but sugar has set expiration dates in March, May, July, and October. You better be ready to make or lose serious money when investing in futures. Our platform has some tools for you to get better at it.
Since sugar is a commodity, minor weather fluctuations will impact its production. Labeling and government interventions can also lead to major price changes. There is a lot to keep your eye on when you decide to trade sugar futures.
ETFs help investors diversify their portfolios and invest in multiple companies simultaneously. You can invest in a sugar ETF like many other commodities and sectors. However, the only one is the Teucrium Sugar Fund (NYSEARCA: CANE). Its main holdings are a mix of futures with different expiration dates.
Final Thoughts: How to Invest in Sugar Stocks
To conclude, there are many ways to invest in sugar. It might not be the most popular investment on the market, but there are many ways to invest in it. I found it surprising that there is only one fund related to this commodity. Thankfully, many multinational companies are in this market, and they might be the right investment for you.
If you want to learn more about trading the stock market, head to our free library of educational courses. We have something for everyone, including trading futures.
Frequently Asked Questions
Sugar stocks like The Hershey Company, Mondelez International, and Nestlé are stocks to buy. Make sure you get a good entry using price action and technical analysis.
There is no pure sugar stock to buy. But you can buy stocks that use sugar, like Hershey's.
The largest sugar company is the U.S. Sugar Corporation. But they're privately owned, so you can't trade them on the market.
The best way to invest in sugar is to buy ETFs, futures, sugar company stocks, and options in sugar.
