With shares of Archer Daniels Midland Company (NYSE:ADM) trading at around $28.67, is ADM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Archer Daniels Midland is a solid company in an industry that might face some steep challenges ahead. Archer Daniels Midland recently had to deal with rising costs due to the drought of 2012 as well as rising costs of corn. The latter has had a negative impact on the company’s ethanol business. Margins have been decreasing in this business, and some experts feel that ethanol isn’t a sustainable business over the long haul. That remains to be seen, but rising costs are definitely a negative for the time being.
On the positive side, Archer Daniels Midland has increased its dividend every year for more than three decades. The yield is currently 2.60 percent. Another positive is an expected EPS growth of 10 percent over the next five years. Furthermore, Miller Tabak upgraded the company to Buy from Hold.
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The following might not have an impact on the stock price, but it should be noted that one employee recently died after being found unconscious in an oxygen-deficient environment. Believe it or not, some investors still consider moral and safety hazards prior to investing in a company. Another individual was also found unconscious, but he was hospitalized and is now in stable condition.
It’s rare that looking at numbers can be referred to as something more enjoyable to read, but this is one of those cases. Let’s take a look at some important numbers for Archer Daniels Midland to get a better idea of the big picture.