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 PepsiCo, Inc. (NASDAQ:PEP) 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 glass of a refreshing carbonated beverage illustrating the company’s different beverages.
PepsiCo, Inc. (NASDAQ:PEP)
Upside Potential: 8.68%
Number of Hedge Fund Holders: 69
In the global food and beverage market, PepsiCo, Inc. (NASDAQ:PEP) has solidified its position as a leading competitor, especially in the sugar-sweetened sector. Listed among the 7 best sugar stocks to buy, the company is dedicated to diversifying its portfolio and making strategic reinvestments.
Due to an extensive selection of snacks and beverages, the company’s growth trajectory remains strong, as indicated by the considerable sales gain of 2.1% in Q4 ended December 28, 2024. However, with an EPS of $0.13 compared to the projected $0.19, earnings fell short of expert estimates. PepsiCo, Inc. (NASDAQ:PEP) has increased its annual dividend by 7% to $1.355 per share, to increase shareholder returns, demonstrating its confidence in its financial stability.
PepsiCo, Inc. (NASDAQ:PEP)’s strategy is centered on innovation and diversification. The company paid $1.2 billion in January 2025 to acquire Siete Foods, a developing company known for its plant-based and grain-free snacks. PepsiCo’s position in the health-conscious market is strengthened by this acquisition. Despite these initiatives, the company’s primary business is still centered around sugar-sweetened goods under well-known brands like Pepsi, Tropicana, Gatorade, and Mountain Dew. The company’s strategy is to provide a well-rounded assortment that accommodates both indulgence and the changing tastes of today’s customers.
Moreover, PepsiCo, Inc. (NASDAQ:PEP) is adjusting by improving its pricing and distribution tactics in response to changing marketplace dynamics. The optimization of its price pack design is one key initiative that provides customers with greater choice and control over portion sizes for its sugary drinks and snacks. With this strategy, the company may reach customers at several price points, maintaining accessibility and continuous brand engagement.
Overall, PEP ranks 3rd on our list of best sugar stocks to buy according to analysts. While we acknowledge the potential of PEP, 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 PEP 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.