Andersons Stock remains a high-risk bet, despite recent selloff

The shares of agro-industry Andersons Inc (NASDAQ:ANDE) are up 2.9% to trade at $30.57 at last check, with shares likely benefiting from some wider tailwinds in the market. However, the stock has largely cooled from its high of $59 on April 21, roughly eight years ago, slipping below the 30-day moving average later that month. Additionally, ANDE just came out of a yearly low of $29.35 and is in a 21% deficit so far this year.

The brokerage group is firmly bullish on Anderson’s stock, with all three analysts on the hedge rated “strong buy.” Additionally, the stock’s 12-month consensus target price of $51.25 represents a notable 67.7% premium to current levels, leaving ANDE exposed to potential target downgrades and/or downgrades. of price.

Anderson shares trade at a cheap price-to-earnings ratio of 10.05 and a price-to-sell ratio of 0.07. ANDE also offers a decent dividend yield of 2.42%, with a forward dividend of 72 cents, indicating higher return potential for long-term and dividend investors.

However, the business involves a high level of risk. Andersons is reportedly $1.16 billion in debt, more than double its market capitalization of $1.04 billion. ANDE also only holds $36.35 million in cash on its balance sheet, which will likely hurt its long-term growth and earnings.

Additionally, Andersons is already expected to report lower revenue for 2022, with estimates suggesting a 7.6% decline. Still, the company is expected to see a 13.5% increase in revenue for 2022. Additionally, its mixed growth expectations could last through 2023, with estimates pointing to no revenue growth, but earnings growth of 11.6%.

It should be noted that the company recently completed the sale of its railcar repair business to Cathcart Rail. According to a press release, the sale helps advance its vision to be North America’s most agile and innovative agricultural supply chain company, and reflects an active effort to improve the company’s balance sheet. company. Nonetheless, Anderson’s stock remains a high-risk investment with limited upside potential.

7 dividend stocks to buy when safety is your top priority

Capital preservation is an important goal for any investor. It is famously summed up by Warren Buffett who says his first rule of investing is not to lose money. And his second rule is to remember the first. When a bull market is on the rise, investors tend to become more aggressive. This means buying growth stocks. And in some cases, these companies may not yet be generating profits at all, let alone paying dividends.

Speculative investors will say the risk is worth it since, according to S&P Global, approximately two-thirds of total return for the S&P 500 over the past 100 years was due to capital appreciation. The other third comes from dividends. And when markets go down, investors look to cover losses wherever they can. This is where dividend stocks come in.

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