The Panic-Proof Portfolio (Stockchase Research)
Archer Daniels Midland Company
ADM-N
TOP PICK
Sep 14, 2023
Stockchase Research Editor: Michael O'Reilly
The large US agricultural player is investigating a joint venture with PSX to produce a low carbon jet fuel. A recent plant outage in Illinois will see processing of corn back up soon. It trades at 12x earnings, 1.7x book and supports a 16% ROE. We recommend a stop-loss at $67, looking to achieve $99 -- upside potential of 22%. Yield 2.1%
The CFO has been suspended due to questions around accounting. Also there have been operational problems. He got stopped out and replaced it with Deere, a long term buy, since he wants something in the agriculture space.
Does not own shares. Agriculture business that is a giant within sector. Tough business with low margins and high capital requirements. Lots of capacity for grain and seed crushing. Food additive business also growing. Better options available for investors in market.
They sold it and take profits, because they had accounting issues and could not file. When the fraud investigation was announced, shares were in the $80s and he expected it to bounce back. Instead, shares have fallen to $61. Sees no upside.
It's now breaking a long downtrend since late 2022. Investors have been dumping defensive stocks the last two months, but he's been adding defensive because they're on sale--and because a correction is looming. Are paid a 4-5% dividend.
The large US agricultural player is investigating a joint venture with PSX to produce a low carbon jet fuel. A recent plant outage in Illinois will see processing of corn back up soon. It trades at 12x earnings, 1.7x book and supports a 16% ROE. We recommend a stop-loss at $67, looking to achieve $99 -- upside potential of 22%. Yield 2.1%
(Analysts’ price target is $99.08)