5 American Stocks That Will Benefit from China’s Economic Slowdown

2. Deere & Company (NYSE:DE)

Number of Hedge Fund Holders: 66

Deere & Company (NYSE:DE) is an Illinois-based manufacturer of agricultural equipment, operating through Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services segments. Oppenheimer analyst Kristen Owen on July 18 reiterated an Outperform rating on Deere & Company (NYSE:DE) and lowered the firm’s price target on the stock to $365 from $419 as she revised her valuation for peak earnings. The analyst expects 2023 to represent another year of volume growth, with high-single digit pricing tailwinds and better margins as various costs improve. However, supply chain constraints persist, she told investors.

Among the hedge funds tracked by Insider Monkey, 66 funds were bullish on Deere & Company (NYSE:DE) at the end of Q1 2022, up from 61 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is one of the leading stakeholders of the company, with 984,517 shares worth $409 million. 

Here is what Harding Loevner Global Equity Fund has to say about Deere & Company (NYSE:DE) in its Q1 2022 investor letter:

“John Deere’s (NYSE:DE) newest tractor, the 8R, can operate autonomously 24 hours a day, controlled by the farmer via mobile app, with full data download of crop specifications and field analysis available via the cloud. Another example of how automation is reaching deeply into traditional manufactured products is John Deere. After 185 years in business, the iconic farming equipment maker has turned the tractor into a platform for software and service revenues. Deere’s newest model, the 8R, can operate autonomously 24 hours a day, controlled by the farmer via mobile app, with full data download of crop specifications and field analysis available via the cloud.

Revenue comes from both the initial capital outlay and monthly subscription fees. During a recent call, Deere’s CEO John May emphasized a point we hear increasingly from leading industrial companies: “The need for autonomy is here today. The demand for the solution is real. We already have customers paying for autonomy.” CFO Ryan Campbell went a step further, suggesting that growth in such digitization technologies will be the primary driver of Deere’s future margin improvements, by increasing the recurring revenues attached to each piece of equipment it sells.”