12-18-2015, 10:02 AM
Ive been a shareholder in ADM for a couple of years now and was waiting for a pullback before I consider adding more....and looks like that pullback has come. A great company with excellent fundamentals.
The company is growing higher margins business segments with their acquisition of Wild Flavors. Another new joint-venture was announced this week expanding into EMEA region.
Positives - food production/transport/processing - stable, reliable, and falls squarely into the consumer staples sector. Last year or two, management has increased the buybacks and increased the payout ratio a bit (IIRC the target is 30-35%). They also have a big presence in China - as China gets richer, more protein consumption translates to higher demand for grains, soybeans etc (each kilogram of pork requires 6 kilogram of feed, according to a study).
Negatives - Falling commodities of course. Also, falling crude prices. With the fall in energy prices, the subsidies for biofuel are growing smaller - and some very strong arguments can be made for completely cutting them off. Other challenges?
Another alternative to consider in this space (again, very strong fundamentals) is Bunge Ltd (BG).
The company is growing higher margins business segments with their acquisition of Wild Flavors. Another new joint-venture was announced this week expanding into EMEA region.
Positives - food production/transport/processing - stable, reliable, and falls squarely into the consumer staples sector. Last year or two, management has increased the buybacks and increased the payout ratio a bit (IIRC the target is 30-35%). They also have a big presence in China - as China gets richer, more protein consumption translates to higher demand for grains, soybeans etc (each kilogram of pork requires 6 kilogram of feed, according to a study).
Negatives - Falling commodities of course. Also, falling crude prices. With the fall in energy prices, the subsidies for biofuel are growing smaller - and some very strong arguments can be made for completely cutting them off. Other challenges?
Another alternative to consider in this space (again, very strong fundamentals) is Bunge Ltd (BG).