Imperial Sugar Company (IPSU)

If you have heard it once, you’ve heard it a million times by now: obesity is a national epidemic. High Fructose Corn Syrup is undoubtedly one of the culprits. In fact, just [this week] a Princeton study discovered that rats which had access to high fructose corn syrup gained significantly more weight than those with access to basic table sugar, even when their overall caloric intake was the same. … That’s why we are adding Imperial Sugar Company (IPSU, Nasdaq) to the portfolio. Founded in 1834, Imperial Sugar is one of the largest producers and marketers of refined sugar in the NAFTA region. The company’s brands include Dixie Crystals, Holly, Wholesome Sweetener as well as a variety of products that the company sells to major industrial foodservice customers. That has given the company a sweet spot in the market since it is one of the only publicly traded sugar companies in the country. What’s more, the company is well on its way in replacing the lost revenues from a massive sugar refinery explosion the company suffered in 2008. In fact the company expects that Port Wentworth will become fully operational again in the second quarter of fiscal 2010. Prior to that, results for both fiscal 2009 and 2008 reflected the absence of a fully operational Port Wentworth refinery which normally comprised approximately 60% of the company’s refining capacity. Additionally, construction is under way on a new $190 million sugar refinery in Louisiana that will be able to produce 1 million tons of sugar annually. That will give the company the future capacity it needs to build its bottom line and send share price higher. … Our recommendation on this company is to buy it as it trades well below its book value of $21.75/share.

Steve Christ, The Wealth Advisory


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