"If you're going to stay invested, you should look to defensive sectors," explain Ron Rowland and Brandon Clay, who point to consumer staples as a top pick for the current market environment.
"In a bear market, opportunities are usually limited to certain sectors. Surveying the investment horizon, we think the consumer staples sector has the best opportunity for growth in this economy.
"Regardless how the economy acts, people still eat. Consumers may not shop at Whole Foods, but they'll still buy groceries. Companies like Wal-Mart (NYSE: WMT) and Safeway (NYSE: SWY) will continue to rake in revenues from hungry customers.
"In addition, these companies should continue to receive additional revenue from consumers who normally shop at specialty stores, but can no longer afford to.
"Consumers may not be shopping at Sharper Image any more, but there are other creature comforts that will be difficult for Americans to abandon.
"Coca-Cola (NYSE: KO) and PepsiCo (NYSE: PEP) will still sell products during a prolonged downturn. In addition, companies providing toiletries and convenience like Procter and Gamble and CVS Pharmacy stand to do well during a shifty economy.
This post is part of a feature in which he wonder whatever happened to some notorious financial felons. See all 17.
How does the head of one of Archer Daniels Midland's (NYSE: ADM) fastest-growing divisions, a virtual shoo-in to be the company's next president, end up embezzling $9 million dollars while simultaneously acting as an informant for the Federal Bureau of Investigation? And how does the highest-level executive to turn whistleblower receive a sentence much harsher than those of his co-conspirators despite pleas for leniency and clemency from everyone from the FBI and the Justice Department to congressmen, university professors, and even a baseball hall-of-famer?
Sounds like the stuff of motion pictures, doesn't it? And that's exactly what this true story will be in September of 2009 with the release of The Informant, a Warner Brothers film directed by Steven Soderbergh and starring Matt Damon as whistleblower turned felon, Mark Whitacre. The movie is based on one of several books written about the case.
When the FBI began an investigation of ADM in 1992, Whitacre admitted that he and other executives were involved in a multinational price-fixing scheme. For the next three years, he helped the FBI gather evidence. Despite that, however, Whitacre was convicted in 1998 for wire fraud, tax evasion, and money laundering. The sentence of more than 10 years in prison was considered excessive by many, given his cooperation with the investigation and the fact that he suffered from bipolar disorder (the pressure drove him to attempt suicide at one point). Whitacre served eight and half years, reportedly as a model prisoner. To this day, efforts continue to win a pardon for Whitacre.
Anglogold (NYSE: AU) closed at $27.47 Thursday. Gold is recently down 3.11% to $789.20 according to Bloomberg. AU September option implied volatility of 51 is above its 26-week average of 43 according to Track Data, suggesting larger movement.
Valero Energy (NYSE: VLO) closed at $33.93 Thursday. Crude oil futures are recently down 1.64% to $113.37. VLO September option implied volatility of 53 is above its 26-week average of 47 according to Track Data, suggesting larger price movement.
Southern Peru Copper (NYSE: PCU) closed at $24 Thursday. Copper is recently down 3.80% to 326 according to Bloomberg. PCU September option implied volatility of 53 is near its 26-week average according to Track Data, suggesting non-directional price movement.
Archer Daniels (NYSE: ADM) closed at $26.62 Thursday. Corn futures are recently down 3.38% to 557.75, Soybean futures are down 2.59% to 1241 according to Track Data. ADM September option implied volatility of 44 is above its 26-week average of 40 according to Track Data, suggesting slightly larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
When natural disasters happen, there are always some companies that can turn the circumstances in their favor. Recent downpours in the Midwest provided such an opportunity as they came not only with high damages for people in the area, but also with floods for crop production, causing even higher agricultural commodity prices. The rise in corn and soybeans prices could easily lead to an increased demand for seeds, agricultural equipment, and fertilizers. BusinessWeeksuggests some big names to invest in that could offer us the advantages we are looking for.
One such company is Archer Daniels Midland (NYSE: ADM), which could also benefit from higher ethanol prices, after purchasing seven businesses in 2007. Bunge Limited (NYSE: BG) is also amid possible winners, having forecast better-than-expected fertilizer earnings. Shell eggs producer Cal-Maine Foods (NASDAQ: CALM) is also on the selected list; the company saw its shares climb 15% year to date, and has just revealed a new dividend payout policy.
Another important name is Mosaic Co. (NYSE: MOS), whose stock prices have surged 70% so far this year. BusinessWeek cites Mosaic as being able to benefit from higher prices for fertilizer and potash. Following the same logic, the article points out potash provider Potash Corp. of Saskatchewan (NYSE: POT) and fertilizer distributor CF Industries Holdings (NYSE: CF), which should be able to take advantage of the weak dollar and higher sales prices.
Readers of this space know that one of my preferred sectors is agriculture due to the boom in food consumption created by emerging market economic growth. Real incomes are rising in nations in Asia, Latin America and the Middle East, and with it, per capita food consumption is increasing, a trend that benefits Archer Daniels Midland.
Archer Daniels Midland (NYSE: ADM) is one of the world's largest processors of oilseeds, corn and wheat.
The frenzy that accompanied the financial world's realization that bio could represent a renewable energy form, for some energy users, appears to be tapering (thankfully). Still, although the bloom is off the biofuel rose, the key driver here remains in-place: commodities for food use. Demand for wheat, corn, soybean and other food basics is likely to remain strong through at least the end of 2009, propelled by the aforementioned emerging market growth.
Most analysts see accelerating earnings growth on strong corn and soybean demand, with pricing power. Further, given the vagaries of the energy business, it's worth underscoring that ADM is foremost a large, vertically-integrated food commodity company (wheat, corn, soybeans). The Reuters F2008/F2009 EPS consensus estimates for ADM are $2.84/$3.24.
The risks? Declining disposable income is expected to pressure U.S. consumer food budgets in 2008, and analysts expect a slowdown in U.S. revenue from food sources, something that will hurt ADM's domestic results, offset by a superior international performance.
The First Call mean rating for ADM is: Buy [10 firms]. Mean 2008 target: $48 [high: $60, low: $39].
Stock Analysis: Archer Daniels Midland is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from ADM's shares. I'd consider a Sell / Stop Loss at $31.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
Archer-Daniels-Midland Co. (NYSE: ADM) shares are rising today helped by higher soybean futures. Soy is getting a boost from higher energy prices including crude oil prices. Alternative energy interests are also getting a lift from an energy bill that was passed by the US House limiting subsidies on oil companies. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ADM.
After hitting a one-year low of $31.28 in August, the stock hit a one-year high of $47.33 in December. ADM opened this morning at $44.99. So far today the stock has hit a low of $44.99 and a high of $46.95. As of 11:15, ADM is trading at $46.05, up 82 cents (1.8%). The chart for ADM looks bullish but deteriorating slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider an April bull-put credit spread below the $40 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 6.4% return in just two months as long as ADM is above $40 at April expiration. ADM would have to fall by more than 13% before we would start to lose money.
ADM hasn't been below $40 since December and has shown support around $45 recently. This trade could be risky if the demand for alternative fuels slows, but even if that happens, this position could be protected by the support the stock might find around $40, where the stock bounced in January.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in ADM.
While Michelle Obama's rather outlandish comment hasn't gotten a lot of mainstream media play, I would like to present two American stocks that even she would be proud of.
Michelle Obama said, "for the first time in my adult lifetime, I am really proud of my country." Now Michelle hasn't exactly led a life of your typical third world citizen. She graduated from Princeton University and Harvard Law School. While America may not be perfect, it is by far and away the greatest nation on earth. If she was so anti-U.S. for the last 25 years, why did she bother staying? The fact that millions of people are trying to enter the U.S. every year means something. You don't see people crowding into boats to be smuggled into Cuba (enjoy your retirement, Fidel).
I will not go into all the things that we can be proud of as Americans that have occurred over the last 25 years. What I will do is present two great U.S. companies that will make you proud. They have not only created products that have been an enormous help to people around the world, but also make for potentially intriguing investments.
The company said its profit increased during the second quarter as the company benefited from higher volumes and selling prices. Strong earnings from oilseed processing and higher feed grains demand helped ADM offset lower ethanol business margins.
Archer's profit climbed to $473 million, or 73 cents per share. These numbers are up from $441 million, or 67 cents per share, in the same period a year ago. Analysts, on average, expected the food processor show earnings of 74 cents per share.
The world's largest producer of corn-based ethanol also announced a respectable jump of 50% in revenue to $16.5 billion, up from $10.98 billion a year earlier. Sales during the period were helped by higher commodity prices, such as feed grains, wheat and corn. Analysts had forecast $12.75 billion in revenue, according to Thomson Financial.
Archer Daniels Midland Co. (NYSE: ADM) shares are trading higher today as corn futures are trading higher. Corn futures are being sent up by rising oil prices, which increase demand for corn ethanol. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ADM.
After hitting a one-year low of $30.20 in January, the stock hit a one-year high of $45.30 on Monday, which it has surpassed again today. ADM opened this morning at $44.99. So far today the stock has hit a low of $44.95 and a high of $45.99. As of 11:15, ADM is trading at $45.75, up $0.76 (1.6%). The chart for ADM looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $35 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in just 6 months as long as ADM is above $35 at June expiration. ADM would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.
Kerr explains, "Our portfolio has already seen some big gains from the agriculture, and we are getting ready to position ourselves for even more gains. How long will the boom last? The honest, albeit unsatisfying, answer is that nobody knows."
The advisor continues, "Growing interest is a good indicator that the grain markets have a good bit of wind at their back. Indicators suggest that we are seeing good momentum in the grain market investment vehicles and likely will for many years to come.
"Meanwhile, there are some key differences about the agricultural trading boom as compared to say the high tech stock frenzy. After all, food, unlike high tech stocks, is not only high in demand; it still remains way undervalued even at current record levels."
Despite recent protests in France over its genetically modified crops, St. Louis based Monsanto Company (NYSE: MON) not only featured new drought- and pest-resistant corn and soy products to international dealers, but also hoped to shop for the best characteristics of foreign crops from those dealers.
Deere & Company (NYSE: DE) took the opportunity to showcase its biggest roll-out of new products -- from tractors to cotton pickers -- in years. They also featured their recent expansion into international markets, including western Europe, South America, and China. Incidentally, Deere has just announced a stock split and increased dividend.
U.S. Agriculture Secretary Mike Johanns attended the show and took the opportunity to urge Congress to restore the 2007 Farm Bill to more closely resemble the White House version. He also urged Congress to ratify pending free trade agreements with Panama, Peru, and South Korea.
It has been a pretty rocky earnings season so far, and on Monday morning, it will be Archer-Daniels-Midland's (NYSE: ADM) turn to step up to the plate. The company will be reporting its fiscal fourth quarter earnings Monday before the market opens, and analysts are expecting to see the company come in with $0.59 per share.
The last time that the company reported earnings was back on May 1 when it put up rather disappointing numbers for its fiscal third quarter. During its third quarter, the company was however able to show higher than expected revenues, but the stock got hit pretty hard due to the lower than expected earnings.
After its disappointing third quarter the stock gradually traded lower through all of May and June before making a modest rebound during the first half of July trading. The past few days have been tough on the company (as well as the entire market) so Monday's results will be critical in determining whether the company's recent rebound will in fact carry into August.
One of the main reasons for the company's less than stellar third quarter was the cost of corn. That could lead traders to think that it may be a better quarter this time around as corn prices have definitely eased somewhat. Corn prices have declined of late, mainly as a result of a report from the U.S. Department of Agriculture stating that U.S. farmers had planted 19 percent more corn this season than a year ago. While that is great news, another crop that the company relies on is soybeans, and this year it is estimated that there were 15% less crops planted than last year.
Let me introduce my Yankee Doodle Dandy portfolio, a compilation of red, white and blue stocks for investors to consider as they celebrate our nation's independence.
Regardless of your views on the Iraq war, there's no denying that defense stocks including Lockheed Martin Corp. (NYSE: LMT), Northrop Grumman Co. (NYSE: NOC), Raytheon Co. (NYSE: RTN) and General Dynamics Corp. (NYSE: GD) are reasonably valued. This is especially noteworthy considering that defense spending will need to be maintained at pretty high levels for years to come in order to replace equipment that's been worn out from combat. President Bush is proposing to spend a record $439 billion in fiscal 2007 on defense and another $42.7 billion on homeland security.
Lockheed, the maker of the F-16, seems especially cheap, trading at a forward multiple of 14.6. Its shares have only gained 4.6% this year even though the company reported better-than-expected first-quarter results and raised earnings guidance. Missile and defense electronics company Raytheon, up less than 3%, is in the same situation.
Investors often overlook the huge businesses that Lockheed and Raytheon have in areas outside of defense, including computer systems and air-traffic control. The managements of both companies also have vastly improved over the past few years. Northrop and General Dynamics have always been pretty well run.
Boeing Co. (NYSE:BA), notably the second-largest defense contractor, also looks worth snapping up. Its stock is up less than 3% this year, which is surprising considering how well it's rebounded against European rival Airbus. The company trades at a forward multiple of 17.7.
"If you're going to stay invested, you should look to defensive sectors," explain Ron Rowland and Brandon Clay, who point to consumer staples as a top pick for the current market environment. 
Anglogold
Here are some highlights from this past week's 
When natural disasters happen, there are always some companies that can turn the circumstances in their favor. Recent downpours in the Midwest provided such an opportunity as they came not only with high damages for people in the area, but also with floods for crop production, causing even higher agricultural commodity prices. The rise in corn and soybeans prices could easily lead to an increased demand for seeds, agricultural equipment, and fertilizers. BusinessWeek 
While Michelle Obama's rather outlandish comment hasn't gotten a lot of mainstream media play, I would like to present two American stocks that even she would be proud of.
Shares of food processor 
It has been a pretty rocky earnings season so far, and on Monday morning, it will be 
Big 3 CEOs drive to Washington to suck up to Congress
GM and Ford ready weak pitches for taxpayer bucks
Cramer on BloggingStocks: A troika of opportunity and trouble 
