- ADM’s extraordinary 10%+ earnings yield is worthy of more research by itself.
- Similarly high earnings yields have produced excellent entry points for investors since 2008.
- The dividend yield/income story is underrated and underappreciated, with the potential for large payout increases over the next 2-3 years.
- If the Fed begins another round of QE buying and lowers interest rates to combat a recession soon, grain prices and ADM are primed for a big climb during 2024-25.
Archer-Daniels-Midland (NYSE:ADM) is a company I have mentioned at various times over my 10 years writing on Seeking Alpha. The most bullish stories were posted after the pandemic selloff, represented by this March 2020 effort here. As explained in my articles, right on cue – extraordinary money printing by the Federal Reserve (and central banks globally) almost immediately led to a sharp rise in grain prices. Since ADM is one of the primary grain storage enterprises, processors, refiners, and transporters to the world (specifically the U.S. market), predicting a substantial future rise in sales and income was not rocket science after the Fed announced “Unlimited QE.”
A new bullish argument during October 2023 has appeared. Buying ADM after a period of weakness in grains (over 12 months) could be a great contrarian decision for your portfolio. Why? My answer is mainly a function of the stock’s vastly improved valuation.
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