Ethanol Glut Adds Uncertainty to ADM

Article Excerpt

ARCHER DANIELS MIDLAND CO. $42 (New York symbol ADM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 643.6 million; Market cap: $27.0 billion; WSSF Rating: Above average) currently accounts for about 15% of the United States’ ethanol production. Fuel companies add ethanol to gasoline to cut harmful emissions. Due to government subsidies, ethanol production has soared in the past two years. However, that has in turn driven ethanol prices down. As well, Archer Daniels needs corn to make ethanol, and rising corn prices have squeezed profit margins. Enthusiasm over ethanol contributed to a 30% gain in the stock in the past six months. However, new government limits on cornbased ethanol subsidies add to Archer Daniels’ risk. Archer Daniels Midland is a hold. hold…