1. Add warm water, sugar, salt, flour, and yeast to the bread machine pan in the order recommended by the manufacturer. Select Dough setting.
2. When the cycle is complete, turn the dough out onto a lightly floured surface. Divide into 8 pieces and shape each piece into a ball. Poke a hole in the center of each ball and stretch the hole to about 1 inch in diameter. Place on a lightly greased baking sheet, cover, and let rise for 20 minutes.
3. Preheat oven to 425°F (220°C). Bring a large pot of water to a boil. Carefully transfer bagels to boiling water, cooking for 1 minute on each side. Remove with a slotted spoon and place back on the baking sheet.
4. Bake in preheated oven for 20 minutes, until golden brown.