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Strategies & Market Trends : Fundamental Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (1937)	7/17/2012 1:26:57 PM
From: bruwin	Respond to of 4719

"I think there is a chance that WEB at some point buys this stock or even makes a bid for the company, if the management is willing to sell." In that case maybe we should beat him to the punch !! I'll add it to the list.

To: Spekulatius who wrote (1937)	7/18/2012 7:47:04 PM
From: E_K_S	Respond to of 4719

ADM is a no brainer as it is selling below it's TBV of $26.96/share. BV has increased every year for the past five years. Their ROA is just under 6% for the past 5 years but a low profit margin (it's a low margin business but high volumes) average just over 3% for the last 5 years. NOTE: AG Growth's profit marge in just over 8%. However, you are able to buy this stock at TBV! That's a bargain especially when the company has little a reasonable debt profile: 7.6x annual net income: Total LT Debt. The company is selling just below it's 5 year PE of 10.0 w/ a forward PE of 9.4. The company also pays a 2.6% dividend. I like Ag Growth a bit better at they have higher profit margins (5yr avg) 3% vs 8%, higher ROE 7.54% vs 12.44% and similar 5 year avg ROA 6.00% vs 7.77%. However, Ag Growth sells at 1.9x BV where ADM sells below TBV. There is also a longer operating history (over many Ag cycles) for ADM. Ag Growth was privately held prior to 2004, so only has 9 years of public history. This sector is cyclical and affected by weather (ie. droughts) so it is key that management can weather the storms and keep cash flows positive. Also, negative weather events can provide excellent entry points. Both company would make good SI candidate stock selections. EKS