Saturday, April 13

Five stock picks in new agriculture and food technology

Deere & Company (DE)
Market capitalisation $118bn Price $383
52-week high/low $447c / $321c Return on capital emp. 13.7%
Forward price-earnings 16 Forward dividend yield 1.1%
5yr EPS CAGR 31.6% 3m forecast EPS change 6.6%

Price-to-earnings ratio, EPS growth and dividend yield based on 12-month forecast earnings EPS = earnings per share; CAGR = compound annual growth rate; EBIT = earnings before interest and tax
Source: FactSet, adjusted earnings figures, data as of 06 May 2022

While it may be known for its gigantic green and yellow tractors and combine harvesters, there is a lot more going on at Deere & Co.

Founded in Illinois in 1837 by John Deere, a blacksmith who developed a plough that helped local farmers get more movement out of their sticky soil, the modern-day company makes a wide range of equipment used in construction, forestry and gardening, in addition to agriculture.

As well as diggers, dumper trucks, loggers and lawnmowers, it makes engines, excavators, power electronics, and even motorised rakers for the sand in bunkers on golf courses, among numerous other products that it sells through an international network of dealers.

Deere & Co, which has been listed on the New York Stock Exchange since 1978, also has its own finance arm and supplies replacement parts and servicing.

Needless to say, technological advances have made their mark on every part of this business. There are the convenience features of a click-and-collect ordering service, a digital replacement parts catalogue and tech-driven diagnostics and repair services, for example.

However, there have also been huge strides in Deere & Co’s equipment, which is at the cutting edge of technological progress in its markets. Its kit for precision agriculture, for example, enables farmers to better control how they plough, sow and harvest, improving their crop yields, reducing their fuel consumption and making the whole process more efficient and sustainable.


Source: Citywire/Morningstar latest disclosed holdings data

Source link