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 Keurig Dr Pepper Inc. (NASDAQ:KDP) 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).
Is Keurig Dr Pepper Inc. (KDP) the Best Sugar Stock to Buy According to Analysts?
A conveyor belt filled with assorted K-Cup pods, ready for packaging.
Keurig Dr Pepper Inc. (NASDAQ:KDP) has made a name for itself in the beverage sector by providing a diverse range of products, including coffee, flavored beverages, and soft drinks. A combination of strategic acquisitions, increased distribution efforts, and innovation has allowed the company to maintain its leading position in a cutthroat market. Given this, Keurig Dr Pepper is listed among the 7 best sugar stocks to buy according to analysts.
With a noteworthy 10% increase in Q4 revenue, Keurig Dr Pepper Inc. (NASDAQ:KDP)’s U.S. Refreshment Beverages division has been one of the main drivers of its growth. With the help of clever marketing strategies and the launch of new flavors like Dr Pepper Blackberry, the flagship brand, Dr Pepper, has maintained its market share growth. Furthermore, KDP’s premium brand Bai has expanded its market reach by offering fruit-based choices, which have improved the company’s standing.
Another key factor in Keurig Dr Pepper’s success has been its strategy to expand its distribution network. The company has incorporated brands including GHOST Energy, an energy drink, and Electrolit, a hydration-focused beverage, into its direct-store-delivery (DSD) system. While GHOST Energy gives Keurig Dr Pepper Inc. (NASDAQ:KDP) a competitive edge in the rapidly growing energy drink market, Electrolit is being positioned strategically for entry into mainstream retail. In addition to broadening KDP’s sources of income, these acquisitions give the company access to rapidly growing markets with significant potential.
Overall, KDP ranks 4th on our list of best sugar stocks to buy according to analysts. While we acknowledge the potential of KDP, 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 KDP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
