Dissolve sugar in water over medium heat. Add peanuts and continue to cook over medium heat, stirring frequently. Cook until peanuts are completely sugared, coated with no syrup. You'll know when they get to this point. It will take approximately 30 minutes.
Preheat oven to 300. Pour sugared peanuts onto an ungreased cookie sheet, which has been lined with foil or parchment paper. Separate peanuts by using a fork.
Bake at 300 for approximately 25-30 minutes, stirring at 8-10 minute intervals. Remove from oven and cool. Store in an air tight container.