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Keep Your Portfolio in the Green with This "Strong Buy" Stock
Like animals in nature, stocks tend to move in groups. The company a stock keeps can help us determine which industry groups are leading the market. The majority of past stock market winners were in top industry groups before they went on major runs.
How can we identify which industries are leading the market? Fortunately for investors, our Zacks Industry Rank makes the process simple. Zacks classifies all stocks into one of approximately 250 industry groups based on the Zacks Rank of the individual stocks. The average Zacks Rank is calculated for every industry group each trading day.
We put the Zacks Industry Rank to the test and compared how the top half (industries with the best average Zacks Rank) and the bottom half (industries with the worst average Zacks Rank) fared against the S&P 500. This study was conducted over the ten-year period from 2008-2017.
Over this timeframe, using a one-week rebalance, the top half beat the bottom half by a factor of more than 2 to 1. Clearly, investing in stocks contained within the top industry groups can give investors a leg up on the market.
Let's take a look at a current example. The Zacks Agriculture – Operations industry group is ranked in the top 35% of all Zacks Ranked Industries. This means that more stocks within this industry are experiencing positive earnings estimate revisions, which is at the heart of the Zacks Rank and is the most powerful force impacting stock prices. Below we can see the outperformance of this industry group (green line, +19.5%) versus the S&P 500 (black dotted line, -7.13%) year-to-date.
Quantitative research studies have shown that approximately half of a stock's future price appreciation is due to its industry grouping. By investing in stocks within the best groups, we can provide a constant 'tailwind' to our investing success. Below we will analyze an individual stock within this top group.
Archer Daniels Midland Co.
Archer Daniels Midland acquires, processes, and transports agricultural commodities and related products globally. The company procures, cleans, and stores raw materials such as oilseeds, corn, wheat, milo, and barley. ADM also offers futures commission merchant and commodity brokerage services. Archer Daniels Midland was founded in 1902 and is based in Chicago, IL.
A Zacks Rank #1 (Strong Buy) stock, ADM has strung together a noteworthy history of earnings surprises as it has surpassed estimates in each of the past ten quarters. The agricultural company most recently reported Q4 EPS of $1.50, a +10.29% surprise over the $1.36 consensus estimate. ADM has delivered a +21.89% average earnings surprise over the past four quarters, aiding the stock's 48% return in the past year.
Current-quarter earnings estimates have been revised upward by +12.61% over the past 60 days. The Q1 Zacks Consensus EPS Estimate is now $1.34, and ADM is scheduled to report these results on April 26th.
Make sure to put ADM on your watchlist.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Archer Daniels Midland
For Immediate Release
Chicago, IL – March 21, 2022 – Today, Zacks Investment Ideas feature highlights Archer Daniels Midland Co. (ADM - Free Report) .
Keep Your Portfolio in the Green with This "Strong Buy" Stock
Like animals in nature, stocks tend to move in groups. The company a stock keeps can help us determine which industry groups are leading the market. The majority of past stock market winners were in top industry groups before they went on major runs.
How can we identify which industries are leading the market? Fortunately for investors, our Zacks Industry Rank makes the process simple. Zacks classifies all stocks into one of approximately 250 industry groups based on the Zacks Rank of the individual stocks. The average Zacks Rank is calculated for every industry group each trading day.
We put the Zacks Industry Rank to the test and compared how the top half (industries with the best average Zacks Rank) and the bottom half (industries with the worst average Zacks Rank) fared against the S&P 500. This study was conducted over the ten-year period from 2008-2017.
Over this timeframe, using a one-week rebalance, the top half beat the bottom half by a factor of more than 2 to 1. Clearly, investing in stocks contained within the top industry groups can give investors a leg up on the market.
Let's take a look at a current example. The Zacks Agriculture – Operations industry group is ranked in the top 35% of all Zacks Ranked Industries. This means that more stocks within this industry are experiencing positive earnings estimate revisions, which is at the heart of the Zacks Rank and is the most powerful force impacting stock prices. Below we can see the outperformance of this industry group (green line, +19.5%) versus the S&P 500 (black dotted line, -7.13%) year-to-date.
Quantitative research studies have shown that approximately half of a stock's future price appreciation is due to its industry grouping. By investing in stocks within the best groups, we can provide a constant 'tailwind' to our investing success. Below we will analyze an individual stock within this top group.
Archer Daniels Midland Co.
Archer Daniels Midland acquires, processes, and transports agricultural commodities and related products globally. The company procures, cleans, and stores raw materials such as oilseeds, corn, wheat, milo, and barley. ADM also offers futures commission merchant and commodity brokerage services. Archer Daniels Midland was founded in 1902 and is based in Chicago, IL.
A Zacks Rank #1 (Strong Buy) stock, ADM has strung together a noteworthy history of earnings surprises as it has surpassed estimates in each of the past ten quarters. The agricultural company most recently reported Q4 EPS of $1.50, a +10.29% surprise over the $1.36 consensus estimate. ADM has delivered a +21.89% average earnings surprise over the past four quarters, aiding the stock's 48% return in the past year.
Current-quarter earnings estimates have been revised upward by +12.61% over the past 60 days. The Q1 Zacks Consensus EPS Estimate is now $1.34, and ADM is scheduled to report these results on April 26th.
Make sure to put ADM on your watchlist.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.