Can Deere Grow Faster in 2013?

As 2013 begins, now's a good time to look at the future prospects for the stocks you own. If you don't know where a company's headed in the next year and beyond, then it's impossible to make an informed decision about whether you should add the stock to your portfolio -- or sell it if you already own it.

Today, I'll look at Deere (NYSE: DE  ) . The agricultural equipment giant harvested some nice gains in 2012, as the sector retained its strength on the back of farmers flush with cash from relatively high crop prices. But can Deere find new ways to grow? Below, you'll learn more about its prospects for 2013.

Stats on Deere

 

 

Average Stock Target Price

$92.68

Fiscal 2013 EPS Estimate

$8.34

Fiscal 2014 EPS Estimate

$8.87

Fiscal 2013 Sales Growth Estimate

5.6%

Fiscal 2014 Sales Growth Estimate

3.7%

Forward P/E

9.9

Source: Yahoo Finance.

Will Deere shoot up in 2013?
Analysts see the good times continuing for Deere, albeit perhaps not at the pace that investors have gotten used to enjoying. The target stock price is a bit more than 5% above current share-price levels, but the prospects for earnings growth in excess of that rate both this year and next point to the potential for better gains if multiples don't contract as much as expected.

Deere has a very strong position in selling agricultural equipment. As long as world demand for food remains on the rise with overall population growth, Deere stands to get at least its fair share of business from hungry nations seeking to improve farm yields. Yet the company is also sounding a note of caution, as it sees revenue gains slowing in 2013 despite efforts from China and Europe to fire up their ailing economies.

By focusing largely on agricultural equipment, Deere remains somewhat insulated from wider trends in the construction equipment industry. That's not necessarily a bad thing, as Caterpillar (NYSE: CAT  ) has given investors pause by giving somewhat pessimistic guidance for 2013 revenue. Still, with Deere already dominating the ag space, it will eventually need to diversify into more all-purpose industrial equipment in order to seek new growth opportunities. Such a move will open Deere up to competition not just from the well-established Caterpillar but also mining specialist Joy Global (NYSE: JOY  ) and new industry entrant General Electric (NYSE: GE  ) .

For Deere in 2013, a lot will depend on how the weather behaves after a dreadful 2012 for U.S. crops. If a new, prolonged Dust Bowl period is beginning, it could spell a big problem for Deere's future domestically.

Where to find real growth
Deere profits from farmers who grow crops, but to grow your portfolio, a tractor won't get the job done. Instead, you need to find revolutionary stocks that will grow into industry leaders, and you need to discover them before Wall Street catches on. Motley Fool Co-founder David Gardner has turned that strategy into winning stock picks for years, and now, he's sharing his secrets in a personal tour of his Supernova service. Don't wait another minute to start earning better returns; click here to accept David's invitation right now.

Click here to add Deere to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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