Elders at $18. Okay maybe $16

Elder is tracking at $A8 as of 2020-03-19. For Elders to reach $A18-$A16, the profit or PE must double. How likely is that? Please, give me a break.

After all it's hard not to sell Elders at the moment. It was $A6.40 a few months ago. They did a credit raise at $A5.55 to expand and the share price is $A8 now. People are sitting on good paper gains. Why not sell, while the going is good. Buy some blue chip bargains. After all the ASX200 is on sale! You are so clever! And checking the sale volumes, I think a lot of people, including myself, have done just that.

But, I have noticed, every time Elders falls to a low of $A7.50 it bounces right back. I have been following Elders shares, with hard earned cash since 2014. This, to put it mildly, is not normal. What gives? What could be the possible reason?

Just a quick recap as to the logic of why I started to invest in Elders back in 2014. The people who made money in previous gold rushes, were not the lucky hopefuls but the people who supplied the picks, shovels and services to the miners. Elders does the same thing for the farming community.

Heads, farmers do well and Elders makes out selling supplies. Tails, Farmers do badly and Elders survive selling farms, banking services and insurance. Elders is, and has been for some time a pure AG play. Which makes the question of "will the Australian economy ride the sheep's back again?" Interesting.

So, Why the Elders resilience when blue chips are falling?

I am not going to talk about the bush fire that means that farmers will need to buy infrastructure from Elders.
I am not going to talk about how the government promised 2 billion to help with the bush fires rebuild for farmers.
I am not going to talk about the swine flu epidemic in China knocking out half the pigs on the planet and the resulting meat prices increase.
I am not going to talk about cheap fuel which is a 10% input on AG.
I am not going to talk about the AUD dropping like a stone against the agriculture super power called the US.
I am not going to talk about the massive amount of rain that has replenished dams. Some for the next few years.
I am not going to talk about the TPP which opens up new markets for our farmers in a few weeks.
- okay maybe a bit . Apparently there will be a 7% drop in tariffs to Japan (126.8 million people) in two weeks.
I am not going to talk about ASX.RHL (another AG company) which was bought out recently at a 50ish% premium. Just after I sold.

Because that was all baked in when Elders rose from $A6 to $A8

I am not even going to talk about empty food shops, which boast empty shelves and will need to be replenished with more farm produce.
I am not even going to talk about how the hordes will have to dump old food when it reaches that sell by date.
- Meaning demand is not necessarily being brought forward.
I am not even going to talk about with demand being high, farmers might feel the need to revisit agreements with retailers in their favour.

I am going to talk about my Grandpa. He started selling eggs at 16 and died a millionaire. Unfortunately, with far too many heirs to make a big difference to me. His favorite saying, the one you got bored of hearing at Christmas? "There will always be a market for food". Which is interesting. Since there is another theory that says that there is always lots of money in the world. It's just the pockets that change.

Currently I don't see a lot of money in Travel companies pockets, Tourism pockets, University pockets, Pubs and Restaurant pockets or even Energy producers pockets. Banking and insurance is not looking crash hot either. So who's pockets will the cash be going to?

I don't know if you know this, but every employed Australian by law puts at least 9% of their salary into super each year. That's a lot of $A to find a home for. Where would you put it if you were a fund manager? The lock down in Europe has just started and will last 30 days. We could be right at the beginning of a wave of black swans as the system is tested and debt is defaulted on. We need somewhere safe.

Let me introduce Elders. A newly minted ASX200 company with a PE of 13. Oh and that is with profits measured at the end of the drought.

$A8? really?

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All Disclaimer. Please advise what I have missed or any facts that I have got wrong. Or better yet a counter argument.