For agriculture machinery manufacturers like Deere and AGCO, the Midwest drought has taken a toll on their stock prices, which are both in the red for the year versus 10%-plus gain for the S&P 500. Yet the Department of Agriculture predicts farmers will make record profits this year despite the worst drought in a half-century. While many farmers are certainly hit hard, insurance and farm subsidies are making up for much of the lost revenue this year. Still, these record profits aren't quite translating to purchases of new equipment from these companies. That's because of uncertainty on the part of farmers who don't want to commit right now to new orders, and a saturated North American market after years of high crop prices and farm revenue. Check out the video below for more on how the drought affects these companies.
While these companies may be on track for a rebound, there are more compelling stocks currently in the market. One of which is a stock that has so much promise that we've dubbed it "The Motley Fool's Top Stock for 2012." In this free report, our chief investment officer identifies his favorite company for the year. To access the report before the rest of the market catches on, click here -- it's absolutely free.