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Zacks Investment Ideas feature highlights: Bunge and Archer Daniels Midland

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For Immediate Release

Chicago, IL – Jun 25, 2018 – Today, Zacks Investment Ideas feature highlights Features: Bunge LTD (BG - Free Report) and Archer Daniels Midland (ADM - Free Report) .

Soybeans Getting Crushed, but This Grain Processor Looks Strong

A combination of a U.S. supply glut and recently imposed Chinese tariffs on imports of American agricultural products has soybeans trading at their lowest level in 9 years. Prices for corn and wheat are also trading near multi-year lows, buy soybeans have been especially hard-hit because the biggest importer of American soybeans is China.

The U.S. is the world’s largest producer of soybeans and threatened tariffs of up to 30% by China could impact U.S. exports by as much as 40%. Anecdotal data from grain merchants is that Chinese customers have already drastically reduced their purchases of American soybeans for delivery later in 2018 in anticipation of having to pay steep tariffs. Those purchases are largely shifting to Brazil and Argentina, the world’s second and third biggest soybean producers, respectively.

A rising dollar also hurts U.S. soybean exports as it makes domestic products relatively more expensive on the world markets.

Global grain merchant Bunge LTD operates a global network of facilities, including grain elevators and port terminals, covering the world’s largest agricultural regions and areas of fastest-growing food consumption.

Bunge is in a unique position to not only withstand the storm in commodity prices but to actually benefit. Operating on five continents, including substantial operations in South America, Bunge is able to satisfy Chinese demand for soybeans and other grain products while avoiding tariffs on U.S. agriculture exports.

After a disappointing last few years due to a supply-glut that significantly reduced profitable trading opportunities, Bunge is now well positioned to capitalize on recent price volatility. While delivering a Q1 earnings beat, the company highlighted improved results across all divisions, including Argibusiness, Edible Oils, Milling Products, Sugar and Bioenergy and Fertilizer.

Bunge significantly raised revenue guidance for full year 2018 and announced that a “Global Competitiveness Program” is expected to reduced expenses by nearly $100M per year.

Rising forecasts have the Zacks Consensus Earnings Estimate at $5.30 for 2018, 175% higher than 2017 and up from $3.87 just 90 days ago. Bunge Ltd is a Zacks Rank #1 (Strong Buy).

Finally, Bunge has been the subject of takeover rumors with English commodity and mining giant Glencore reportedly considering a bid. Bunge has had informal merger discussions with both Glencore and Archer Daniels Midland over the past year but nothing has come of them so far. In general, counting on a merger or buyout to drive stock price is a shaky investment strategy at best, but with Bunge trading at a forward P/E ratio of 13.3X – below the industry average of 14.3X – having suitors contemplating a deal is bullish, whether or not the acquisition happens.

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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 for information about the performance numbers displayed in this press release.

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