5 Commodity Stocks to Buy on the Dip

1. Deere & Company (NYSE:DE)

Number of Hedge Fund Holders: 66

YTD Share Price Decline as of July 8: 12.99%

Deere & Company (NYSE:DE) is an Illinois-based company that manufactures industrial equipment. The company operates through four segments – Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services. The stock has declined about 13% year to date as of July 8. 

Citi analyst Timothy Thein upgraded Deere & Company (NYSE:DE) on July 7 to Buy from Neutral with a price target of $340, down from $435. The analyst slashed estimates and targets “across the board” in the machinery sector but observed short-term estimates “should be largely insulated” given large backlogs and embedded pricing. However, he upgraded Deere & Company (NYSE:DE) to Buy as he sees a “2:1 upside/downgrade case” from present share levels. He recommended leaning towards large-cap names like Deere & Company (NYSE:DE). 

According to Insider Monkey’s data, 66 hedge funds were long Deere & Company (NYSE:DE) at the end of the first quarter of 2022, up from 61 funds in the last quarter. Jean-Marie Eveillard’s First Eagle Investment Management is a significant shareholder 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.”

You can also take a look at 11 Best Dividend-Paying Stocks to Buy Now and 10 Stocks That Cathie Wood and Steve Cohen Love. 

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