Archer Daniels Midland Company (ADM)

danmangrove (79.10) Submitted: 5/04/08 9:29 AM : Start Price: $36.38 ADM Score: 22.88

ADM is not an ethanol company, like the street seems to think. Only ~10% of revenues and earnings are ethanol. Government policy with mandates for increased usage of ethanol, subsidies for ethanol blending, and tariffs for Brazilian ethanol have helped ADM grow this small portion of their business. As we see the political pendulum swing, as meat producers complain about ethanol being the cause of their woes, ADM may get beaten down a lot more than 10%. Therein lies the opportunity.

The intellectuals who complain about ethanol being the main cause driving feed and food prices are substantively wrong. Worldwide crop failures are the real cause, and if production in Europe, SA, and Australia get back on track, grain prices will go back down.

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