Is Archer-Daniels-Midland (ADM) the Best Ethanol Stock to Buy According to Hedge Funds?
Ethanol stocks are from companies that manufacture, sell, or distribute ethanol, a biofuel derived from crops such as corn and sugarcane. The ethanol industry is booming. As per Precedence Research, the global fuel ethanol market stood at $106.20 billion in 2024, climbed to $111.64 billion in 2025, and is anticipated to exceed $174.98 billion by 2034, representing a 5.12% CAGR between 2024 and 2034. The North American ethanol market is estimated to be worth $60.53 billion in 2024, growing at a CAGR of 5.20% over the forecast period.
Overall, the United States is the world's leading producer and exporter of fuel ethanol, and prices in the country stayed relatively low in 2024. Moreover, Brazil is the second-largest producer and exporter. Growth Energy, the nation's largest biofuel trade association, released data revealing that ethanol exports from the US set a new high in 2024. In total, the country exported 1.9 billion gallons of ethanol valued at $4.3 billion in 2024, breaking the previous record for volume set in 2018 and the prior record for value established in 2023.
Growth Energy CEO Emily Skor commented:
'The numbers don't lie. The world is looking to the U.S. to meet its fuel needs and American producers are delivering in a way that supports economic growth abroad and at home in rural communities across the country,' 'As the new Administration puts its new trade priorities into action, we look forward to working with President Trump and his team to ensure that we build on this momentum in a way that continues to grow the American farm economy through sales of American ethanol abroad.'
Recently, the U.S. Energy Information Administration reported on April 2 that the output of fuel ethanol in the US rose by 1% in the week ending March 28. Stocks of fuel ethanol were down 3%, whereas exports dropped 62%.
Most importantly, the export market remains the most attractive opportunity for driving US ethanol demand in 2025. Looking ahead, according to Jacqui Fatka, a farm supply and biofuels economist at CoBank, ethanol usage in higher-level blends is anticipated to surge annually in the US, but it accounts for just a tiny fraction of total ethanol demand due to the market's size. Therefore, without large expenditures in infrastructure that allow retailers to adjust pumps or signage, nationwide E15 sales will not significantly increase in the time to come. Currently, the export market represents the best possibility to boost demand in 2025.
According to the United States Department of Agriculture's most recent quarterly trade projection, announced on February 27, ethanol export volumes in the US would hit a record 1.85 billion gallons in the fiscal year 2025. The forecast is slightly higher than the previous quarter's outlook.
We sifted through online rankings to form an initial list of 20 Ethanol stocks. From the resultant dataset, we chose the top 12 stocks most favored by hedge funds, using Insider Monkey's database of 1,009 hedge funds in Q4 2024 to gauge hedge fund sentiment for stocks. We have used the stock's Market Cap as of April 3, 2025, as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points ().
A wheat field at sunset, showing the company's commitment to agricultural commodities.
Number of Hedge Fund Investors: 38
Market Cap as of April 3, 2025: $23.01 billion
Archer-Daniels-Midland Company (NYSE:ADM) is a leading processor of oilseeds, corn, wheat, and other agricultural products. The company's vast network of logistical assets allows it to store and ship grains all over the world, making it one of the biggest grain merchandisers. The firm also operates a nutrition company that specializes in both human and animal ingredients and is a major manufacturer of ethanol, starches, and sweeteners made from corn, which makes it among the Best Ethanol Stocks.
Before selling the crops to consumers of food, feed, and energy, the company buys them from farmers and then transports, stores, and/or processes them. Archer-Daniels-Midland Company (NYSE:ADM)'s profit margins are narrow since its competitors' commodity products are easily accessible, and it has little control over the prices of the products it purchases and sells. Furthermore, the firm finds it challenging, though not impossible, to turn a profit due to the capital intensity of its operations.
Archer-Daniels-Midland Company (NYSE:ADM) reported Q4 2024 adjusted EPS of $1.14 and full-year adjusted EPS of $4.74, in line with expectations. In the fourth quarter, the total segment operating profit was $1.1 billion, and for the entire year, it was $4.2 billion. The company effectively ramped up the Spiritwood facility, strengthened North American operations, and elevated crush volumes in canola and rapeseed. Production output increased by 3% year over year due to strong plant performance, and multiple North American product lines saw record operating profits. Along with developing biosolutions and health and wellness innovations, the business further improved its safety record by cutting process safety incidents by more than 35%. A quarterly dividend increase was also announced by the company, which has now paid dividends for 93 years in a row.
Overall, ADM ranks 3rd on our list of best ethanol stocks to buy according to hedge funds. While we acknowledge the potential of ethanol companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ADM but that trades at less than 5 times its earnings, check out our report about this .
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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