All's well down on the farm these days.
Deere & Company
Investors bought bushels of Deere stock, sending shares higher by about 5% to $67 (near a new 52-week high). The maker of everything from tractors to front loaders to lawnmowers said sales of farm equipment jumped 25% while construction and forestry equipment receipts rose 46% over the same period last year.
Management attributed the growth to improving economic conditions and the weakening U.S. dollar, which allowed overseas buyers to invest in new equipment on the cheap. Here at home, new rules that allow for accelerated depreciation of capital equipment spurred a buying spree at the end of last year. (Translation: The Internal Revenue Service is allowing farmers, et al., to write off more equipment purchases up front.)
Can the good times continue? It seems so. For one, the Department of Agriculture is forecasting a $7.5 billion rise in crop receipts from 2003 to 2004.The resurgence in farming bodes well for Deere as agricultural equipment accounted for 46% of sales in the last quarter. But it could also have a wider impact on earnings among farm-related stocks.
Is every farm stock a good buy? Of course not, and you'll have to do your own digging to discover which ones might be attractive. But, as Deere's results demonstrate, there is strength in agribusiness. Foolish investors should take heed -- bargains could be lurking near the bottom of the silo.
Do you find yourself leafing through endless stacks of paper searching for bargain-priced stocks? Tom Gardner and our team of Foolish stock analysts are doing the same. Let them help you. Try 30 days of Motley Fool Hidden Gems risk-free.
Motley Fool contributor Tim Beyers has been known to kill grass and grow weeds, so he deeply admires farmers. He doesn't own shares of any of the companies mentioned here.