Midday Report: Sugar Subsidies Could Send Candy Prices Higher

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The Sugar Act of 1934. The Farm Bill of 2008. They're not on the radar of most consumers, but those laws have a big impact on sugar prices, and right now that could mean higher prices for your favorite candy bars.

Here's what's happening: Sugar prices are under pressure because of a big crop of sugar beets in the Midwest. But according the Wall Street Journal, those arcane laws mentioned above mean the Agriculture Department might have to buy 400,000 tons of sugar. That would keep sugar processors from defaulting on nearly $1 billion worth of loans made under a government price support program.

A Hershey's Milk Chocolate Bar is submerged beneath M&Ms, a Mars product, for an illustration in Cambridge, Massachusetts on Wednesday, January 24th. Hershey Co.'s fourth-quarter profit fell 9.9 percent, trailing analysts' estimates, as smaller rival Mars Inc. took a bigger share of the U.S. market.. PHOTOGRAPHER: JB REED
A Hershey's Milk Chocolate Bar is submerged beneath M&Ms, a Mars product. (JB Reed, Getty Images)

The effect would be prices heading back up, to the benefit of American Crystal Sugar, Amalgamated Sugar and other companies that make sweeteners. But candy makers could be hit with another round of price hikes, and historically, they pass along higher costs to consumers.

The candy industry is up in arms. An industry trade group claims the sugar subsidies hurt consumers and jeopardize lots of jobs. The biggest candy makers are Mars, Hershey (HSY), Nestle and Cadbury (MDLZ).

If there's a silver lining, it's that this won't boost prices for your peeps, chocolate bunnies and other Easter candies, because those items are already on store shelves and won't be affected by the possible swings in sugar prices.

Of course, this is not the only sugar controversy in the news this week. At the last minute, a judge blocked New York Mayor Michael Bloomberg's proposed ban on large sugary drinks from going into effect. Critics say that could have cost consumers money, while proponents maintain the longer-term health benefits would save far more.

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Midday Report: Sugar Subsidies Could Send Candy Prices Higher

(DIS)

This childhood favorite is a lot more than theme parks and cartoons. With ABC and sports powerhouse ESPN under its corporate umbrella, Disney is a media giant. Over the past decade, it bought Pixar and Marvel Entertainment, and Disney's recent pickup of Lucasfilm will give the House of Mouse access to the blockbuster "Star Wars" franchise for years to come.

(SBUX)

As a Starbucks shareholder, seeing lines around the corner for coffee will put a smile on your face. Consumers still seem happy to spend big money on its java, and its new growth initiatives are aimed at expanding its sales of juices, tea and baked goods, too.

(IBM)

IBM may be best known for its computer hardware, but the company has diversified to become a one-stop shop for IT services, and IBM has enjoyed better profits as a result of that strategic shift. As it gets more involved in the hot cloud-computing area, look for even more opportunities ahead.

(XOM)

You may drive by the biggest U.S. energy company's gas stations every day, but the oil giant's operations go well beyond the pumps around the corner. ExxonMobil's extensive global oil- and gas-exploration operations are leaving no stone unturned looking for new sources of fossil fuels. Owning some ExxonMobil stock lets you profit from those high prices you've been paying at the pump for so long.

(AAPL)

Apple products may never seem to be available at a discount, but Apple's stock is a relative bargain these days. With shares more than 25 percent off their recent highs, some analysts fear that Apple's best market-cap growth may be behind it. But with the latest iPhone, along with new products in its iPad and Mac lines, Apple has bright enough prospects to lure value investors into looking closely at the stock.

(PG)

With dozens of consumer products bringing in upwards of $1 billion in annual sales, Procter & Gamble is a household name around the world. Investors will especially like P&G's dividend record: 56 straight years of payout increases, giving shareholders consistent, reliable income.

(JNJ)

Johnson & Johnson is ubiquitous in medicine cabinets and hospitals everywhere, thanks to products from Band-Aids and Tylenol to high-end medical equipment and pharmaceuticals. Plagued by recalls in recent years, J&J nonetheless has an impressive dividend yield of 3.5 percent and has given long-term investors half a century of annual dividend increases to boot.

(KO)

Beverage giant Coca-Cola has the No. 1 brand in the world, and it's made the most of it by expanding across the globe to find new growth opportunities. Sales in North America have been less than stellar, but with emerging economies increasingly interested in the kinds of consumer products that the developed world takes for granted, Coke has huge potential to become as widely consumed around the world as it is domestically.

(BRK-A) (BRK-B)

Warren Buffett may be in his 80s, but the Oracle of Omaha is still a force to be reckoned with in the investing world. With the company's recent decision to repurchase shares near their current price, new shareholders can feel confident that the stock's a good value right now in the eyes of at least one renowned investing guru.

(MMM)

Best-known for innovations like Post-it Notes, 3M is actually a massive conglomerate doing business in defense, health care, and electronics as well as office supplies. With its 2.5 percent dividend yield and 54 years of consecutive annual payout increases, shareholders will like the way 3M treats them.

(DEO)

This beverage company's name may not be familiar to you, but if you drink even occasionally, you certainly know its brands: Guinness, Johnnie Walker, Smirnoff, Captain Morgan and many, many more. This British alcohol giant has some of the strongest brands in the world and has been expanding across the globe in search of new growth opportunities. In a recession-resistant business, Diageo is a powerhouse.

(MCD)

McDonald's has been the king of fast food for decades, but the company has also been nimble, getting into smoothies and premium coffee at exactly the right time. The stock has historically done well during tough times, so owning it gives your portfolio some protection from a possible downturn.

(WFM)

Dubbed "Whole Paycheck" by many, Whole Foods has nevertheless captured a loyal customer base with its organic food and other healthy offerings. The stock isn't cheap either, but with plenty of untapped growth potential, Whole Foods is worth paying a little extra for.

Now you have a baker's dozen strong options to choose from, so get 2013 off on the right foot by putting your money to work. The stock market will have its ups and downs this year -- as it does every year -- but over the long haul, stocks have a great chance of outperforming the minuscule returns you're getting from your savings accounts and CDs.

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