We follow a broadly diversified strategy, seeking stocks for their long-term appreciation potential.? We buy only those stocks we find undervalued along several lines relative to their own trading history, those of their peers or that of the market in general.
Here's three such stocks in various commodity sectors: Archer Daniels Midland (ADM), BHP Billiton Ltd. (BHP) and Marathon Petroleum (MPC).
Archer Daniels Midland is a global leader in the distribution, processing and merchandising of agricultural products and commodities.
We are positive on ADM as we feel confident that the longer-term global secular growth trends in agriculture are intact.
We like that ADM's product line is diversified and that it continues to expand its global origination and transportation network. We are also fond of its 16% stake in Wilmar, Asia's largest agricultural processor.
ADM shares are cheap relative to 5- and 10-year average multiples. Shares offer a current dividend yield of 2.3%.
BHP Billiton Ltd., an Australian miner, is one of the world's largest with diverse businesses ranging from base metals and aluminum to diamonds and coal.
Concerns about the U.S. economy, the Eurozone debt crisis and a Chinese manufacturing slowdown have driven commodity volatility over the past six months, yet prices have not collapsed.
We remain optimistic on the long-term demand for BHP's stable of commodities as global economies recover and industrialization continues in China, India and other emerging markets. The balance sheet is strong and the shares carry a 2.7% yield.
Marathon Petroleum is one of the largest independent refining firms in the U.S. with its six domestic refineries having through- put capacity of 1.1 million barrels per day.
It also operates over 5,000 retail gasoline sites a! nd a log istics network that stores and transports crude products.
We like the diversified earnings mix that helps mitigate refining volatility and we think the shares are attractively valued, especially after recent weakness. The yield of 3.0% is also nice.
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