ConAgra Foods, Inc. (CAG), CHS Inc. (CHSCP): A Positive Outlook for This Joint Venture

Who is left out?

Left out of the joint venture is Archer Daniels Midland Company (NYSE:ADM), an agricultural commodities company thought of as the number two U.S. milling company, which has been struggling over the past year due to a drought last summer. In the previous quarter, Archer Daniels was not able to match its EPS from last year by $0.12, or 20%. With a forward P/E of 10.96, 6.6 less than the current P/E, Archer Daniels Midland Company (NYSE:ADM) claims to grow its earnings in the coming year, but investors are still unsure. Being left out off Ardent Mills will seriously limit its competitive edge in the milling industry. Many analysis suggest to hold this stock because predictions on future stock price growth over the next year range from (11.9)% to 18.5%.

The bottom line

This major joint venture will benefit investors of both ConAgra Foods, Inc. (NYSE:CAG) and CHS Inc. (NASDAQ:CHSCP)significantly, considering that this joint venture is truly an attempt to strengthen market positions of all companies. None of the companies merging into Ardent Mills are considering this merger to be a risky endeavor, so neither should investors. With investors already benefiting from higher stock prices since the announcement of the joint venture in March, these companies will only see further success once the merger is finalized. Clearly, the companies involved in this joint venture are perceived to benefit significantly compared to their main competitor Archer Daniels, which is left struggling. Now is the time to invest in ConAgra Foods and CHS.

Nadine Gibson has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Nadine is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article A Positive Outlook for This Joint Venture originally appeared on Fool.com and is written by Nadine Gibson.

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