Tomahawk, WI 8/15/2013 (Basicsmedia) – Deere & Company (NYSE:DE) is well known for its operations in the fields of financial services, as well as construction and forestry and agriculture and turf. As a major player in the agricultural industry, DE has been affected by the not-so-good-news that has been the norm in the recent days. It seems safe enough to say that the industry has not enjoyed 2013 and has been affected by numerous factors, some of which have spilt over to the companies which operate within. With that said, I want to examine whether DE has a bright future ahead or not.

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Image shows DE’s revenue, net income and profit margin from 2012-2013.

Image is from www.google.com/finance

How is the Agriculture Market Performing?

This sector has seen a sharp fall in the prices of basic commodities compared to what happened in the summer of 2012. This is what has led to underperformance on the part of most agriculture stocks in 2013, at least up to this point. DE hasn’t been spared from this poor performance although it has made up for the short fall in other sectors, where it has diversified into. It is critical to mention that the weakness which this stock, together with others in the industry, has shown is only short term. There are several other benefits and opportunities to look forward to.

Despite the poor performance in terms of food prices thus far in 2013, the general consensus is that this industry is one which has a very good and bright future. The long term cycle and outlook for the agriculture sector is bullish. This is because the world is bound to struggle with limited food supplies, which is good news for investors. Therefore, this is one reason why investors must start thinking of getting shares in companies such as DE, which already has a major presence through its tractors and other farming equipments.

What Does DE Require for Long Term Success?

If DE can focus on increasing its presence in emerging markets such as Brazil, it has a very bright future. Brazil is already one of the world’s largest producers and exporters or agricultural products. Therefore, it has a very large appetite and demand for tractors and farming equipments which DE can readily supply it with. There is likely to be a major demand and pressure placed on Brazil to keep up with its production of farm produce and food, and this will drive its need for the best farm equipment to make farming much easier and more efficient.

Deere also needs to continue investing in the developed economies where it currently enjoys the status of being viewed as a market leader. It is already a market leader in economies such as the U.S and Canada. Farm income in the U.S is projected to grow by close to 14% before settling at around $128 billion. Deere can get a significant share of the market, which would help to improve its revenues and profit margins, as long as it is able to reduce its expenses. As farmers upgrade their machinery in order to enjoy better returns, Deere will benefit as well from this.

If you want to invest in stock which is bullish over the long term, DE is the right one for you.

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