The market has discounted earnings for all companies in the 4th qtr of 2008 ( expects low earnings). When ADM displays, not the expected decrease, but a heavy increase in earnings, ADM will go up. 1) Due to the earnings themselves 2) Due to the PE multipile going higher
This is what i think and even if earnings are flat it will outperform most of the market. This is my favorite pick for this point in time, good long term fundamental growth and stable baseline earnings in weak economic times. jmho.
The next set of earnings in the general market will start to reflect the economic slow dowm. So big oil, mining, and most manufacuring earnings will be down, but i think adm will perform well. Most of adm products and services are not dependant on the economy, as they provide a staple. So adm should stand out as a good performing stock even in a weak economy. It should then get noticed more by the market and analysts and investors will start to purchase more stock.
I will always remember the experienced analyst on the television who commented on a stock that was way down on little reason. He said always good to buy a good company when it has a falter, as it will likely recover. adm gave us the buying opportunity in the last 3 months or so. There was little reasoning behind the sell off only speculation of the effect of high commodity prices at the time. I still think adm is a buy up until $40 then it becomes a hold, for a while. I do think we will see adm at $40 this year. If one wanted to redeploy capital, i would think selling only a portion of the adm holding makes any sense. I doubt one can find a much better long term hold than adm. jmho