Deere & Co. (DE)

Take profits. The stock is ahead of itself trading at a high PE. They will have record earnings this year, but the price is already reflecting that and more. The new Biden administration will mean lower trade tensions with China will make farmers happier and wealthier. Deere has gotten into the heavy equipment business to compete with Caterpillar. A Biden infrastructure bill would really help.

This will go higher. So will Mosaic (MOS).

A JPMorgan analyst last week reported lower crops supply and rising demand near term, a perfect storm, which will result in higher spending on North American agriculture. Throw in strong demand from China. The same report urged a sell on Deere--that's crazy.

This is a stock he likes a lot because management is so good. Every time there is trouble, this company finds a way to take market share away from their competitors. Keep in mind that this is about 75% agricultural, so they are going to rise and fall with the farmers of the world. Feels agriculture is a good place to invest in, because people are always going to have to eat.

(Market Call Minute.) The cycle is very long. The farmer is still on his knees and not buying farm equipment. This is one you can nibble at, but you might have to wait awhile before you see a catalyst.

The economy has just gone through a commodity -type cycle. The question is, when is the cycle going to bottom out. Because we have had such a long commodity cycle, it is a really tough question to answer. Prefers taking other types of cyclical risks.

75% of what they sell are farm tractors. This has perked up lately and outperformed the market in 2016. Soybeans traded at a maximum limit increase yesterday in the futures market, up 5.5%. That is good for farmers. The other issue that it is not just North American farmers, but farmers globally. One of the big markets for them is Brazil. Commodities that Brazil does well in are not bouncing back yet. The company should do well as long as soybean and corn perk up, and the US and Canadian farmers do better.

(Top Pick Sep 24/14, Down 9.89%) He liked the agricultural prices being depressed and you would get an uptick when they turned around. Then the Agriculture business got more depressed. He has to make some decisions about whether to keep it or not. It is much better run than CAT-N.

It is rather exciting because you might think the whole farm machinery business is a growth business. There are very real cycles on replacement of farm equipment that does not correlate to the wealth of farmers. He thinks we have a couple of years before the next replacement cycle.

It has crashed since they had negative guidance for 2015 and 16. He would wait for the growth outlook to stabilize before buying.

(A Top Pick Aug 14/14. Up 9.7%.) The crop prices were down and people were not buying farm equipment, which pushed the stock down. Also, the forestry side was doing poorly. He felt they were going to be able to fix the forestry side, which they did. A good company and the agricultural side will do well over the next couple of years. Still a Buy.

(Top Pick, July 4 2014, recommended at 91.38 now 94.96, up 6.75 %) Inexpensive. Still buying it. Originally bought because of restructuring of company, still thinks it's good.

(Top Pick May 29/14, Up 5.48%) He was expecting 10%. They had great numbers last quarter. The farming side of the business has slowed down. If this ticks up they should do very well. We can buy the stock cheap at these levels.

(A Top Pick April 29/14. Down 2.48%.) Still likes the stock. Not trading at a huge multiple, Around 12X earnings. Decent dividend yield. With the crop cycle, this is a time to own it. They not only have the agricultural business, but also have a more industrial business that has turned around and is doing better. Thinks this will do well over the next couple of years. Still a Buy.