In the commodities space, sugar is known for its price swings. The ubiquitous sweetener has ranged from about 2 cents per pound all the way up to roughly 66 cents per pound in the last 40 years or so. Reasons for these dramatic fluctuations have to do with the systems in place to grow, process, and distribute the sugar. But as with great fluctuation comes excellent opportunities for investment, as evidenced by the five companies below.

Sugar Price Volatility

Anything from adverse weather conditions to geopolitical strife to currency volatility to shifting consumer tastes can impact the cost of sugar as a commodity. As such, most investors look to trade sugar as a commodity on a short-term basis. It's rare to find stocks that trade on major U.S. exchanges and for companies which are focused on the sugar business.

Late in 2018, sugar fell below 10 cents per pound for the first time in a decade before climbing back up by close to 50% in a matter of weeks.

India and Brazil are the world's largest producers of sugar cane.

The list below is presented with the market cap for each company as of late April 2019, as well as the monthly performance based on the stock price as of January 2, 2019, and closing price as of April 24, 2019. There are inclusions in this list of companies in the food and beverage and confectioner spaces as well, given that these businesses are impacted by the sugar trade. The performance has been compared to the Dow Jones Commodity Index Sugar average returns of 8.13% as a benchmark.

Cosan (CZZ)

  • Market Cap: $2.769 billion
  • Performance vs. DJCISB: 23.46%

Based in Brazil but with operations across South America and in the U.K., Cosan is a conglomerate with interests in sugar and energy. Cosan has about 600,000 hectares of land dedicated to growing sugarcane. As both a sugar company and an energy outfit, Cosan stood out for its performance early in 2019.

Brazil's new president, Jair Bolsonaro, has been seen as boosting companies which make use of the country's natural resources. Cosan has likely benefited from this perception early on in his presidency.

Mondelez (MDLZ)

  • Market Cap: $72.454 billion
  • Performance vs. DJCISB: 17.24%

Mondelez is an Illinois-based company which is one of the world's largest manufacturers of confections and snacks. This company owns many of the most popular brands of snack foods worldwide, including Nabisco, Oreo, Ritz, and many others. Like several of the other companies on this list, Mondelez is not directly involved in the growing and processing of sugar. However, as a producer of some of the world's iconic sugary snacks, Mondelez is nonetheless linked to this industry.

In early February, Mondelez makes public its annual report for the previous year. During 2018, the company generated $25.9 billion in global net revenues and $3.4 billion in net earnings, outpacing previous years' figures. Mondelez has also been strengthened by a new strategic plan, launched in September of 2018, which focuses on the development of its brands in new markets.

Tootsie Roll (TR)

  • Market Cap: $2.46 billion
  • Performance vs. DJCISB: 14.77%

Tootsie Roll Industries, maker of the iconic Tootsie Roll candy and a host of other confections and candies, has been in business since 1896. The Chicago-based company produces 64 million of its trademark candies each day and sells its products in nearly 80 countries worldwide.

Tootsie Roll Industries met with reasonable success in the first weeks of 2019, although it did not perform well enough to surpass the sugar commodity benchmark index. One of the most noteworthy events for the company during this period was its dividend payout of $0.09 per share, which was in line with previous dividends for the company.

Investors tend to trade sugar on a short-term basis because the price of sugar as a commodity can fluctuate wildly due to anything from currency volatility to adverse weather conditions to geopolitical strife.

Hershey (HSY)

  • Market Cap: $25.982 billion
  • Performance vs. DJCISB: 7.99%

Pennsylvania's Hershey Company is one of the largest chocolate manufacturers in the world. With nearly 125 years of experience, the company sells its products in about 60 countries around the world and has lent its name to everything from theme parks to stadiums.

The end of 2018 and the start of the new year have been difficult for Hershey. While the company sports strong attributes, including an impressive dividend yield of 2.77% and ironclad brand recognition, in recent years Hershey has suffered losses that many analysts attribute to ineffectual management.

The company has engaged in questionable acquisitions, has failed to see increases in revenue, and more. All of that is to say that, while Hershey is likely not going anywhere, it may not be the best time to invest in this stalwart candy maker.

Rocky Mountain Chocolate Factory (RMCF)

  • Market Cap: $57.295 million
  • Performance vs. DJCISB: 3.34%

While some of the other confectioners on this list develop, manufacture, and distribute their products, Rocky Mountain Chocolate Factory is also a retailer. The Durango, Colorado-based company offers hundreds of chocolate and related products from stores across the United States and in several other countries around the world. It is a much smaller operation than the other companies on this list, with a market cap of just over $50 million.

Rocky Mountain Chocolate Factory had a middling performance in January, placing it toward the bottom of our list. This may have been due to disappointing quarterly results which were made public midway through the month. For the three months ending November 30, 2018, the company generated just $8.9 million in total revenue, short of the $9.9 million earned over the same period in 2017.

The Bottom Line

The few companies that are both involved in the sugar industry and that also trade on major U.S. exchanges are susceptible to a finicky commodity in addition to the typical challenges facing any business. Nonetheless, for those that manage to break away from the pack, the performance can be noteworthy.