Tuesday, August 2, 2011

Archer Daniels Midland - 2.2%

Archer Daniels Midland (ADM) is one of the largest agricultural companies in the world.  As a strong proponent of investing in company's that profit off things with intrinsic value, I believe ADM or other such agribusinesses should be a part of everyone's portfolio.  At $30 a share and trading at multiples of under 10, I consider ADM a buy and accumulate. Having not missed paying a dividend in decades also works in ADMs favor.  In fact, ADM is down recently, probably, I'm guessing, from the recent calls to end ethanol subsidies.  I for one (in addition to being against the ethanol subsidies, despite my stake in it) believe this is a very short term issue and ADM, with their vast ability to diversify, will be back up soon enough.  Of course, being located in the second worst state for doing business (Illinois) may not help either with short term outlooks, especially with class warfare rhetoric from their current Governor.  Indeed, it looks as if tax increases were responsible for ADM missing their most recent quarterly profit expectations.

You may have heard of ADM thanks to the recent Matt Damon movie "The Informant" and their price fixing scandal in the early 90's.  I'm fairly confidant that those price fixing days are behind them. 

ADM is another stock I've nearly doubled my stake off of as one of the "blue chips" I purchased during the height of the Lehman Brother's, "The sky is falling, the sky is falling", stock market "crash".  This one was chosen by my wife after reading "The Omnivores Dilemma".  I don't know what you got out of that book, but my wife got "Buy Archer Daniels Midland!" out of it.

Archer Daniels Midland started in 1902 as Archer-Daniels, a linseed crushing company based out of Minnesota.  With the acquisition of the Midland Linseed Product company, Archer Daniels Midland was first incorporated and, dare I say it, born.  Systematically and deliberately growing and expanding into many agribusiness facets, ADM has systematically added such agriproducts as soybeans, corn, and cocoa to its agri-portfolio, and now is the premier company for linking the farmers raw products to the consumer.  Along with RIG, ADM is another stock I may accumulate more of, especially at $30.  However, I also like Mosaic (MOS) as an alternative to one's agribusiness portion of their portfolio.

No comments:

Post a Comment