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ADM: Harvest of Profits Ahead?
Recently we featured Potash as our stock of the week for the Bull/Bear Column and all the stock has done is go up in value. The entire agriculture space is literally on fire. As such I
wanted us to explore another popular name in the space. This time I want to hear your thoughts and opinions on Archer Daniels Midland (ADM).
Again, we are living in an upside down world. At a time when the economy is stalled and investors get defensive with food companies we are seeing instead a more offensive investor that is driving prices in the space through the roof. Despite trading at its 52 week high ADM appears to be cheap on a valuation basis. Shares trade for just 13 times trailing earnings and 14 times forward earnings.
The company pays a steady 1% dividend to go along with a strong balance sheet. The kicker obviously is rising prices for its products and yet investors are able to purchase that dynamic at
less than premium prices. It looks to me like ADM is a fine place to invest even with the recent rise. What do you all think? Answer below or post your thoughts on ADM on your blog.
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Comments (1)
TheAImanac![[TypeKey Profile Page]](http://www.investorplaceblogs.com/strategylabopen/nav-commenters.gif)
:
Outlook for ADM? That one's a lay up... ADM's valuation in the stock market is a function of who's in the White House. Let the numbers speak for themselves. The market value of ADM has increased 276% since George Bush has been in the White House.
That's even better than Bush's father, during whose term in the White House (1988 - 1992) ADM increased 208% in market value, however, Bush-the-Elder achieved his 200% gain for ADM in only 4 years...!
Given ADM's close commercial alliances with the Federal Government, think ethanol, there will always be government business. Under Bill Clinton, the market value of ADM also increased, but a lesser, 22%.
CONCLUSION: If the Republicans win in November, BUY ADM.
Here's the back-up data:
Percent Mkt Value
S&P 500 Change ADM Change
(mm)
Today 1413.90 $28,429
Last Business Day
before Inauguration
of George Bush 1342.54 5.3% $7,557 276.2%
of Bill Clinton 418.86 220.5% $6,205 21.8%
of G H W Bush 249.32 68.0% $2,012 208.4%
Posted by
TheAImanac |
May 3, 2008 5:26 PM
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