U.S.-China tariff relief: Which agri stock presents the most upside?
The U.S. and China are negotiating tariff relief for up to $30 billion in agricultural goods, with China planning to cut tariffs on commodities like corn, wheat, meat, soy, and dairy. Discussions are ongoing, and a trade truce extension has been agreed upon until early January.
Three U.S. agri stocks stand to benefit most from the Chinese tariff relief: Tyson Foods (TSN), Archer-Daniels-Midland (ADM), and Bunge (BG). Tyson Foods, currently trading at $50.92 with a market cap of $17.87 billion, has the highest valuation room, with a Fair Value of $63.60, representing a potential upside of 24.9%. The Forward P/E has dropped by more than half, from 31.1x to 14.5x, due to analysts expecting earnings to recover from weak margins.
Tyson's revenue has grown to $54.44 billion over the past four years, but costs have risen, leading to a decline in gross margins.
Archer-Daniels-Midland (ADM) is trading at $81.12 with a market cap of $39.10 billion. Its Fair Value is $84.58, reflecting a modest 4.3% upside, but analyst targets suggest only a 0.9% upside. The EV/EBITDA ratio stands at 13.9x, indicating a relatively cheap valuation. ADM's revenue increased to $80.27 billion in 2025, but its gross margin fell to a five-year low of 4.8%, driven by higher costs and limited profit from recent revenue gains.
While access to China for meat could bolster demand, the share price may already reflect lower tariffs on grain exports.
Bunge (BG) is priced at $109.00 with a market cap of $20.94 billion. Its Fair Value stands at $99.33, suggesting an 8.9% downside, while analyst targets predict a 30.1% upside. The discrepancy between the two measures likely stems from recent revenue increases and falling gross margins. Bunge's revenue surged to $70.33 billion in 2025, but gross margins have stagnated at a five-year low of 4.8% due to limited profit margins on oilseed processing.
The absence of soybeans from China's tariff relief list could further hinder Bunge's upside potential.
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