Value Expert Targets Archer

04/16/2015 8:00 am EST


Although corrections are always possible, I do not foresee a bear market coming in the near future. Yes, there are stocks that are considerably overvalued, but there are also undervalued stocks with the potential for considerable long-term gains, asserts value-oriented expert Russ Kaplan, editor of Heartland Advisor.

Along with oil and the metals, prices for agricultural commodities are at very low levels. For me, this is an opportunity to invest in financially solid companies in this industry sector.

As with cyclical industries, I very much doubt if they are going to stay low long-term. I am also enthusiastic about Deere (DE) and Caterpillar (CAT), which produce agricultural equipment.

Another area in the commodities sector where I am finding value is among the food processors. My latest recommendation is Archer Daniels Midland (ADM), which is trading at a recent price of $46.

Archer Daniels is in the food processing area of agriculture producing such products as vegetable oil and ethanol. The company was founded in 1898 and knows how to deal with cycles in commodity prices such as we are going through now.

Although this may not be as exciting as 3D printing, it’s a product that is necessary and will no doubt show up in about the same form in 20 years.

Financially, this is an A+ rated company that can ride out the cycle we are going through now.

Officers and directors, the most knowledgeable people concerning Archer Daniels must feel the same way because they own 2.7% of the company shares. This also gives them the long-term perspective that is so necessary in running a company.

Archer Daniels dividend is 2.4%, which is slightly above average, although it has been increased four times since 2011 and is likely to be increased again in the near future.

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