Deere: Solid value for income, growth
This company has been a leader in the farming equipment market since 1837.
By Russ Kaplan, Heartland Advisor
John Deere Company (DE) was founded in 1837 and it continues to stick by its commitment to integrity, quality and the promise to change to meet the needs of the global economy.
The company was founded by a blacksmith and inventor by the same name. This was around the time the wooden plow was being replaced by Deere's stainless steel plow, which could allow farmers to cut better rows for their crops.
There have been many innovations since then, from combines, to planters to lawn mowers and much more; and Deere has always kept up with or developed and implemented these many changes.
It has grown to the point where it has dealers throughout the world, spanning Africa, Asia, Middle East, Australia/New Zealand, Europe, Central /South America, and North America.
Over the past 175+ years, Deere has branched out into such areas as farm equipment, lawn and grounds-keeping equipment, forestry equipment and even toys.
We first recommended investing in Deere back in 1998, when it was trading in the mid $30 range.
Although Deere is now trading in the low $80 range it still fits our value criteria of continuing to be a financially solid stock, which offers a good opportunity to purchase it or to buy more of the stock if you already have some.
The stock price is down due to a weak world economy, but I don't see this condition continuing indefinitely. Even in this economic climate, Deere had a 2012 return on equity of 45%.
Plus, there will always be the need to plant food and to keep the environment safe enough to support all growing plant life.
The dividend at about 2.5% will be a nice supplement to your income while you wait for the stock price to turn around.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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