5 Best Manufacturing Stocks To Invest In

1. Deere & Company (NYSE:DE)

Number of Hedge Fund Holders: 54

Deere & Company (NYSE:DE) is a major manufacturer of agriculture machinery and equipment. On August 19, the company released earnings for the third quarter of fiscal 2022. The company reported earnings per share of $6.16 and generated a revenue of $13 billion, up 24.8% year over year, and beat expectations by $157.8 million. As of October 7, Deere & Company (NYSE:DE) is trading at a PE multiple of 17x, has gained 2.84% over the past twelve months, and is offering a forward dividend yield of 1.27%. The stock is one of the best manufacturing stocks to invest in right now.

On September 13, DA Davidson analyst Michael Shlisky reiterated his Buy rating and $445 price target on Deere & Company (NYSE:DE). This August, Argus analyst John Eade raised his price target on Deere & Company (NYSE:DE) to $420 from $390 and maintained a Buy rating on the shares.

At the close of Q2 2022, 54 hedge funds were long Deere & Company (NYSE:DE) and held stakes worth $1.58 billion in the company. Of those, First Eagle Investment Management was the top shareholder in the company and held stakes worth $294.7 million.

Here is what LRT Capital Management had to say about Deere & Company (NYSE:DE) in its second-quarter 2022 investor letter:

“Deere & Company (NYSE:DE) manufactures machines and equipment, which help the agriculture and construction industries. The company’s production and precision agriculture segment manufacture global equipment and technology solutions for production-scale growers of large grains, small grains, cotton, and sugar. The small agriculture and turf segment develops equipment for dairy and livestock producers, crop producers, and turf and utility customers. Finally, the construction and forestry segment make a range of machines for the earthmoving, forestry, and roadbuilding production systems.

The company is the leader in farming and agricultural equipment and competes with the likes of CNH Industrial and Kubota Corporation. Deere has generated returns on equity of over 20%, and in many years well above 30%, for more than two decades. How is this possible when the company’s end markets are so cyclical?

Deere sells an “ongoing relationship” to farmers, as every piece of equipment purchased leads to a steady supply of future parts and related services. The true source of Deere’s competitive advantage is the company’s dealership network, and its ability and willingness to finance the purchase of its equipment for farmers. The unique nature of its distribution system and the credit decisions that are made at the distributor level have created a structure that has allowed the company to keep credit losses to astonishingly low levels.”

You can also take a look at 10 Best Diversified Dividend Stocks To Buy and 12 Best Consumer Staple Stocks.

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