Jim LebenthalDeere & Co.DEBUYDec 06, 2023

He'd be really hesitant. Highly cyclical. Tied to the fortunes of farmers, ag and fertilizer prices, tariffs, fuel prices.

Good company. While its business isn't going out of favour, he'd go with other companies in the broader infrastructure space.

CAT is probably a slightly better opportunity. Or the rails.

He owns neither. CAT has down really well. Both benefit as agriculture recovers. 

He was wrong to recommend this last June. Shares drifted lower since then. Last August, they reported a solid earnings beat and raised their full-yar net income forecast. Last week, they reported a healthy top and bottom line beat including positive net sales growth of 14%, but Wall Street ignored that. Instead, the street focused on disappointing guidance for 2026. Investor Day highlights: expecting 10% net sales CAGR from 2025-2030, and mid-cycle profit margins around 20%. After cooling off this year, DE is ready to run again. Great to buy at lower prices now.

It reports Wednesday. Agriculture is a tough, but necessary business. So, if farmers struggle, then government will subsidize them, which will benefit Deere. Many commodity prices have plunged in recent weeks. What is the impact on Deere's sales? You can buy shares after the report, but don't rush.

Is a heavy cyclical, depending on farm incomes and commodity prices, which you can't predict. DE equipment isn't cheap, so farmers must be confident enough to buy it. It's been difficult to predict. He's done okay with it before, but other sectors are more predictable.

They host an analyst meeting Tuesday and he expect them to tell a great story about farmer orders. It can go higher.

Long-term chart demonstrates the excellent business and operations. We all need to eat. Focus going forward will be autonomous farming vehicles -- it will sell software to farmers as well as equipment. Valuation will ebb and flow with food and commodity prices, as well as the economy. He stays away from commodity-type businesses.

We need better ag machines to feed the world, ever-demanding more food, and Deere is front and center of that. They use big data to reduce crop nutrients, so they are on the leading edge of farming. Is a little concerned about their financing. But this is good the next 5-10 years.

He expects a weak quarter on Thursday. Share prices are falling due to farmer incomes, which should turn around. Price crops should increase. Deere has controlled inventory.