Archer Daniels Midland ADM stock has pulled away a bit as the food cycle contracts. However, it looks now relatively priced for the next cycle of inflation, food etc. At the end, we all need to eat.
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I’ve been watching this stock! Looking forward to your update!
Thank you for this analysis!
I established a Position in ADM and I hope to hold it for a long time as a dividend stock.
Return on invested capital is wrong with this company. ROE over the last 10 years: about 10% I guess, ROIC: constantly clearly below 10%, that is less than the return of the S&P500. This company is structured for longtime underperformance. As Charly Munger said, over the long term you do not make much more return than the underlying company makes. That is a trading vehicle at best. nothing you can hold.
Exactly what I was thinking. Cheap for a reason.
If you’re retired and need low risk dividend stocks with low volatility. This is perfect.
could you also cover humana stock its severely down, more than 50%
i also see a minus 6 procent pre market for adm on the sunday.
Out of curiosity, how do you see these premarket values on a Sunday? I was in the understanding that premarket trading for US traded stocks typically only occurs on weekdays, specifically from 4:00 AM to 9:30 AM (Eastern Time)
@@danielegianetti5599 i see it now when i search on google, adm stock
Thank you, Sven!
ADM – Rubis – Acomo – Ahold, the Sven Carlin’s magic quadrant ☺️👍💪
These are the publicly discussed names, which means he likely doesn’t own meaningful positions in either.
i am heavily invested in ADM, more than 100k, for these years, i am totally -2% unreleased loss, the stock crashed 50% from its all time high, i was working there years ago
Should be positive as they are paying dividend. This is my Fourth largest in my portfolio..but just started after the accounting issue.
Don’t sell. I held a good amount of baba for 2yrs and sold for a loss the day before this 25% rally happened. Don’t sell lol
@5:20 $40 would appear more in-line with your mark on the chart. $50 is merely the 52-wk low.
I recently bought 100 ADM shares and sold a 55 ITM Jan 2026 call option against it. The time premium was 5.04, and the expected divs will be 2.50 between now and expiration. This gives me 21% downside protection and a 15.1% gain if assigned (which I most likely will). If the stock is below 55 in 2026, I’ll keep the stock at a cost basis of $47.46. Sure, I may not make as much if the stock skyrockets, but my strategy is to earn at least 10% annualized with a lower risk than owning the stock outright.
Net margin of ADM is typically between 3 and 4%, last quarter was worse (2.18%). Even if the business is strong and essential, I still feel insecure with such low margins.
Normal margin is more usually in the 2.5-3% range. The last couple of years have seen better results from high inflation: you can’t expect them to sustain these levels.
If revenue stabilizes around 80b and net margin tays around 2.7%, the current dividend represents a 45% payout, whih translates into a 4-5% yield when shares trade in the 40-50 range.
Another 10% of profits deployed towards buybacks adds another 1% yield at these levels, for a 5-6% total.
That leaves almost 50% of profits available for reinvestments, on which they get a 7% return on average.
If you add 3% growth from inflation and another 3% from acquisitions, you get to a likely 10% over time, from a well managed business that will likely be here for the foreseeable future.
The cheaper you can get such businesses, the better. But overall this is low risk, medium reward, with further upside potential if we get another inflationary wave.
Looks to me like, of the four most recently reported quarters, two had profit margins matching the low margins of 2019, 2020, and two quarters had higher profit margins. If we assume that it wouldn’t be too weird for the company to revert back to every quarter having those lower pre-recent-inflation-era margins, there’s still downside risk of well over ten percent. Not as much downside risk as most tech companies.
Thanks!
Most importantly, it is an inflation hedge for portfolios.
🗽 Earnings in 2022 and 23 were exceptional for ADM…. expected earnings for next year are above the earnings of the year 2021.
ADM’s consistent dividend history and strong cash flows make it a compelling long-term investment.
And its diversified business
segments mitigate risks. Nutrition segment’s growth potential is particularly promising.
3.5% dividend yield is attractive. But do you think ADM can maintain its dividend growth streak?
ADM’s valuation is reasonable, but what catalysts can drive growth beyond its stable business model?
Also ADM’s dividend growth streak is impressive, and I think they can maintain it given their strong cash flows.
Exactly! And their nutrition segment expansion into plant-based proteins and specialty flavors can drive growth beyond the stable business model.
An interesting strategy for dividend companies is to sell a long-term covered call on it. This way you get an extra premium that reduces risk/downside and you collect the dividend while not getting exercised on the option.
For a company with little or no pricing power, raising the dividend so consistently over the years is pretty impressive. Payout ratio is still low at 37% making future raises likely.
Hey let me know too when it is 50 😅😂😇
What about the accounting scanadal? What a superficial video…