These IBD 50 Food Stocks Have Bases Near Expiration


Expected food shortages in Europe and developing countries this winter have underpinned strong rallies in food and food manufacturing stocks. However, supply chain issues related to the Russia-Ukraine war and the fallout from Covid haven’t stopped these four food stocks from breaking support lines.




X



love ingredients (DAR), nutrient (NTR), Sociedad Quimica Y Minera (QM) and Archer Daniels Midland (ADM) all fell below their 50-day moving averages on Friday, threatening to erode recent new bases.

According to the Financial Times, the sell-offs follow European farmers and food manufacturers warning of food shortages amid rising energy prices.

Food supply Archer Daniels Midland Slips

Archer Daniels Midland, which processes and markets agricultural commodities, fell below its 50-day moving average and tested support at its 200-day moving average.

According to MarketSmith, ADM stock formed a cup-and-handle basis from April through August. It briefly rose above the 91.54 buy point on 9th September but reversed the next day. Grocery stock is now 10% below its buy point of 91.54 and is moving in the wrong direction.

See if it can get the ship on its 200 day line. One positive sign to watch for: the relative strength line is hovering near a new high as major indices test or break yearly lows.

Also Read :  Citrix-Tibco Close $17B Deal, Uniting Virtualization And Enterprise Apps Vendors

This industry leader performs well in other areas, ranking first in its grain and related food group according to the IBD Stock Checkup. However, the group itself ranks at a low 127 out of 197 industries. ADM stock also holds a strong composite rating of 96 out of the highest possible 99 and is first in its group with earnings per share of 96 and a “B” rating for sales, margins and return on equity (or SMR).

Basically, Archer Daniels remains healthy. Quarterly earnings are up 24%, 37%, and 62% over the last three reporting periods. Analysts are now seeing a 41% increase for the current quarter and 32% for 2022.

Agricultural Chemicals Food Stock

Chile-based agro-industrial chemicals company SQM also formed a cup-and-handle basis, which plunged through support at the 50-day moving average.

Similar to ADM, the stock briefly broke above a buy point of 113.80 but failed to hold the entry and is now 17% below the buy point.

Its 89 EPS rating is far from outstanding, but quarterly earnings have grown an impressive 732% on average over the past three quarters. Additionally, Wall Street sees full-year EPS up 520%. Its 98 Relative Strength Rating earns the stock the top spot in its group for this metric.

Also Read :  Stocks To Watch: Darling Eyes Buy Point In Today's Market Rally

SQM is driving the global adoption of electric vehicles that use lithium batteries. Demand for lithium, a critical material for EV batteries, has outstripped supply and pushed prices higher.

SQM also produces iodine and potassium, which are used in X-rays and fertilizers, respectively.

Last but not least, the stock is included in the Sector Leaders and Global Leaders lists.

Darling Stock rides on hard times

Darling Ingredients damaged its cup-and-handle base, falling 7.5% on Friday and slicing through its 50- and 200-day lines. The stock is now 17% below where it started.

Unlike the ADM and SQM, Darling’s RS line has also taken a nosedive, starting at levels well below its high.

Darling recycles oil and other waste produced by the country’s food industry. It is #1 in its farming group.

Earnings growth, which has averaged 47% over the past three quarters, has slowed to 8% in the most recent period. Analysts expect EPS to recover 61% for the current quarter and 37% for the full year.

Also Read :  Why the stock market gets a red card during soccer's World Cup

The SMR “A” rating marks another strength that puts the company at the top of the group of 24 stocks.

Finally, Nutrien, which makes fertilizer and related products, has joined the other three food stocks below their 50-day line.

It is also trading below its 200-day moving average, with a lot of work to do before it can form a new base, preferably above the 50-day and 200-day moving average. Meanwhile, its RS line is on a gentler descent than the S&P 500, showing optimism.

NTR stock remains at the top of the rankings with the highest possible EPS rating of 99 on a strong fundamental basis CF industries (CF).

Average EPS growth for the last three quarters is a striking 647%, while analysts are expecting growth of 201% in the current quarter and 164% for the full year.

YOU MAY ALSO LIKE:

Chip gear makers face a slowdown in consumer spending

Wall Street analysts squabble over Netflix stock after Q2 results

Chip gear maker ASML tops Q2 views but guidance disappoints

Looking for market insights? Check out our IBD Live Daily segment

Best Growth Stocks to Buy and Watch: See IBD Stock List Updates



Source link