(FORTUNE Magazine) – Raw-materials costs are up because of the drought. Bad earnings news lies ahead. Just the time to shun the stock of food processor Archer Daniels / Midland, right? Don't you believe it, say most of the security analysts familiar with the Decatur, Illinois, company. The stock may be no barn-burner in the next six months. But by dampening the price, they say, the clouded short-term outlook has created an opportunity to buy into an efficient, cash- rich company on a strong underlying growth trend. Lately, Archer Daniels stock has hovered around $20 a share and a price/ earnings multiple of 10. Says analyst Bonnie Rivers of Salomon Brothers: ''It's the best long-term buy in the food group.'' Some Wall Streeters see a possible kicker in the company's new degradable plastic, which could help alleviate the country's trash problem. The $6.8-billion-a-year company is No. 1 in its two main businesses, processing soybeans and wet-milling corn to make high-fructose corn syrup and ethanol fuel. Higher soybean and corn prices aren't as big a problem as they appear, since Archer Daniels can pass along most of these costs to customers. But the drought has hurt some, and profits on ethanol, which is blended with gasoline, are down because of weak fuel prices in general. Analysts expect earnings in the October-December quarter to trail a year- earlier period, when soybean prices were lower and demand for soybean products was strong. But rest assured, the bulls say. Lee Tawes of Oppenheimer & Co. expects earnings per share to increase 10% in the fiscal year that began July 1, to $2.15. He looks for $2.50 in the following year and increases averaging 15% over the next five years. Archer Daniels won't say much about its degradable plastic. Recently the company applied for a patent on a process using cornstarch to make plastic bottles and bags that would break down over time. To Leonard Teitelbaum of Merrill Lynch, it's just one more reason to ignore the bumpy road ahead: ''Archer Daniels's prospects are so great, I'm willing to buy through a down quarter.''

CHART: NOT AVAILABLE CREDIT: SOURCES: SALOMON BROTHERS, BOND BUYER, DONOGHUE'S MONEY FUND REPORT, COMMODITY EXCHANGE This is FORTUNE's fortnightly look at the major markets of the past five years.