Tim Brown: Archer Daniels Can Rebound

This morning it reported very strong quarterly numbers. ADM said its earned $1.05 billion, or $1.63 a share during its fiscal first-quarter. Analysts had been expecting, on average, 69 cents a share. The reported earnings more than doubled its profits from the year ago period. In the first fiscal quarter last year, the company earned $441 million, or 68 cents a share. ADM said it benefited from an accounting change and higher prices for its goods.

Sales jumped to $21.16 billion, a 65% increase from the $12.83 billion in the year ago period. Wall Street had been calling for $15.98 billion in sales. ADM said the higher sales was a result of higher average selling prices

Now the saying goes, "buy low and sell high", right? So, now that the stock has rallied off the earnings news, why am I buying? Because I think this stock still has room to grow. The stock had lost nearly 39% of its value in the last year. Its numbers blew Wall Street's estimates out of the water. Investors like this company and were just waiting for some good news. Obviously past performance is no indicator of where it will go in the future, but ADM has a 52-week high of almost $49.

Even with its rally, in early morning trading the stock was at about $24.50, up about 15%. The market has been dragged down so far, and with it some really good companies have taken it on the chin.

I had waited to see what the company was going to report. I generally do not like to buy stocks that are approaching their quarterly numbers because it can be just too risky. Now that this stock appears to be on the way up, I'm glad to ride that wave a bit.

"Keep moving the chains!"