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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Imperial Sugar could be in line for some sweet profits

Universal Press Syndicate

When it comes to investing in sugar through stocks, investors have few choices. Imperial Sugar (Nasdaq: IPSU) is one of them. It refines and sells sugar to beverage companies such as the Dr Pepper Snapple Group and even to oil refiner Valero for use in proprietary drinks at its gas stations. Although Imperial Sugar has competitors in the United States, most are privately held, not listed on stock exchanges.

Increasing sugar prices in 2009 helped Imperial’s stock price gain 22.5 percent last year, but it didn’t prevent another unprofitable year for the company. In fiscal years 2008 and 2009, the firm was unable to turn a profit, due in large part to an explosion at one of its refineries in 2008. This crippled its refining capacity and contributed to a substantial decline in sales.

Imperial has regrouped and recently finished reconstructing its damaged refinery. Capacity is expected to return to its 2007 level this year, which would double 2009’s production. However, the company had to borrow money to finish its refinery and maintain its operations. This debt adds risk for shareholders, as its repayment will have to come from future earnings.

Still, should Imperial Sugar’s refining capacity return to normal and sugar prices continue to rise in the future, the stock could be headed for a sweet ride upward as the profits roll in.

Ask the Fool

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My dumbest investment

Back in August 1999, I bought $100,000 worth of PowerShares QQQ. I made a $140,000 profit in a few months, but the problem is: I never sold! I rode it all the way back down and ended up losing a bunch of money. Now that was really dumb. – A.S., online

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