Archer Daniels Midland (ADM) Stock Is the Chart of the Day
NEW YORK (TheStreet) -- Shares of Archer Daniels Midland Co (ADM) - Get Report are rising, up 0.66% to $47.27 in mid-morning trading on Wednesday.
"The ADM management team currently receives the best ISS Governance QuickScore, which is a score of 1, that ISS can give a company," said Skip Raschke of SOTDaily.com and Options Profits contributor in a post this morning.
Raschke believes the company has a solid balance sheet with a modest price to earnings ration, given a potential "pop in earnings," which is expected to be released in the first week of May.
He added that Archer-Daniels-Midland has been in the farm products industry since 1898, and is more than a futures broker and insurer. The company has a market capitalization of nearly $30 billion, with annual revenue that exceeds $80 billion.
Raschke's trade tactic for Archer-Daniels-Midland is "the out-of-the-money, bullishly-biased vertical call spread, expiring in September." He says this tactic keeps dollar risk quite low, while buying time into late summer.
Decatur, IL-based Archer-Daniels-Midland-Co is engaged in the processing of oilseeds, corn, wheat, cocoa, and other agricultural commodities. The company's operations are classified into three business segments including oilseeds processing, corn processing, and agricultural services.
Insight from TheStreet's Research Team:
Archer Daniels Midland is the OptionsProfits Team's chart of the day. Here's what Skip Raschke of OptionsProfits had to say:
ADM, over the past 52 weeks, has traded in the $42-$54 range. That $54 high was a double-top that formed in late November and December of 2014. The low was made when the market spiked down in mid-October of last year.
Technically, ADM has a bullishly rising one-year stochastic which is confirmed by a bullishly rising RSI. Also take note that, ADM has formed into my coiling pattern.
Thus, you can expect that ADM's options volatility (its options premiums) are being offered at a relatively low cost (in the low 20s) to those who buy options premium.
Thus, you can expect that ADM's options volatility (its options premiums) are being offered at a relatively low cost (in the low 20s) to those who buy options premium. If nothing else low premium costs, due to among other reasons in addition to the stock prices coiling, reduces capital risk and increases leverage for those who trade options from the long side as per options premium.
The trade tactic for ADM that I prefer now is the out-of-the-money, bullishly-biased vertical call spread, expiring in September. This tactic keeps dollar risk quite low, while buying time into late summer.
Trades: Buy to open ADM Sep 50 calls for $1.40 and sell to open ADM Sep 55 calls at $0.40.
The total risk for the trade is $1.00 per spread. The target to close for a gain is a bid of $1.50 and the target to stop out the trade is a bid of $0.50.
- Skip Raschke, 'Skip Raschke Intermediate Trade: ADM Technicals Looks Bullish' originally published 3/25/2015 on OptionsProfits.
Want more information like this from Skip Raschke BEFORE your stock moves? Learn more about OptionsProfits now.
Separately, TheStreet Ratings team rates ARCHER-DANIELS-MIDLAND CO as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ARCHER-DANIELS-MIDLAND CO (ADM) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, compelling growth in net income, attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 87.4% when compared to the same quarter one year prior, rising from $374.00 million to $701.00 million.
- Net operating cash flow has significantly increased by 117.39% to $450.00 million when compared to the same quarter last year. In addition, ARCHER-DANIELS-MIDLAND CO has also vastly surpassed the industry average cash flow growth rate of -36.56%.
- ADM's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: ADM Ratings Report