Brooke ThackrayDeere & Co.DEDON'T BUYMay 14, 2014

Has owned this for a while, but the agriculture cycle is over. He's held onto this because it's a different ag company. That said, the ag background is highly bearish.

Why is this a battleground stock? They ripped the band-aid off their last report and set future earnings at a proper level, but see a low bar in their forecast: 12x forward PE. Crop prices have been weak for a while, but that's the best time to buy Deere.

He sold it because he expects weak global growth in the first half of 2024 which will impact the international industrial names. He's getting more defensive in industrials and he sold Deere on strength last month.

The momentum is broken. Something has changed in the past year: maybe the agricultural cycle has deteriorated, replacing tractors has declined given high interest rates maybe. The balance sheet... It checks all the boxes. Good fundamentals. But if stocks remain like this at the end of January, he will sell in his quarterly rebalancing.

They reported a beat but lowered guidance. This remains a good company that is simply being cautious, which may be warranted in the face of the lag effect of Fed comments, but will be short-lived. They have set a bar they can easily clear. A buy.

It's been challenging for him. The agriculture and commodity cycle is in trouble due to weakening demand. Perilous.

Agriculture prices are much lower than last year, so farmers are no longer spending a lot of money in capex. But Deere is also in construction.

Great long-term investment, because long term we gotta feed the world. Buy some and wait.

Outside tech, there is now catch-up in other sectors. Look at the price action in Deere and how they recovered from their post-earnings debacle.

200-day MA meandering higher. Likes industrials as early-cycle winners. Strong global brand. Global demand for corn and soybeans will stay robust. Uptrend is there, but possible resistance around $450. Decently valued at 14x forward earnings, 15-16% growth rate. Couple of names he likes better.

Trades less than 13x PE. A good construction business, but some are worried about their farm business, but if the latter drags down shares, then buy on that weakness.

Has owned this since 2021, based on agriculture seeing a positive cycle and a replacement cycle in farm equipment, which happened. Momentum is getting stretched though. Agriculture prices are declining.

Sold it already. Agriculture prices are declining and prices for new tractors are rising, so farmers are getting squeezed. Shares are not cheap, but long term it's good. He will rebuy it down the road.

Good for this point in cycle as economy recovers. 
Cyclical business.
Good time to buy.

Problem is economic slowdown to a recession. Industrial spending and capex will slow. Among the industrials, agriculture probably has better growth.