Archer-Daniels-Midland: Actionable Call Alert (ADM)

From Notable Calls:

- Merrill Lynch is upgrading Archer-Daniels-Midland (NYSE:ADM) to Buy from Neutral noting the recent ~40% correction in commodity prices has lowered ADM’s working capital needs and improved the company’s cash flow significantly. This improvement in cash flow has also allowed ADM to repay all the commercial paper ($2.2 billion) it had outstanding at fiscal year end (June). Firm expects commodity prices to continue to moderate, which should strengthen ADM’s balance sheet further....

...Notablecalls: I like this call.
- The shares have traded down ~60% over the last 6 months on a combination of factors, including: grain spikes early in the summer following widespread flooding in the Corn Belt; concerns about sustainability of earnings in the near term; concerns regarding demand destruction from higher crop prices, and more recently, concerns regarding the company’s balance sheet and its financial flexibility (MLCO comment)

The end-demand is still there, especially with prices now down. ADM stock has gotten hit along with the AG space but it's quite clear they stand to benefit from lower prices as the are merely processors....MORE