7 Best Heavy Equipment and Industrial Machinery Stocks to Buy

4. Deere & Company (NYSE:DE)

Number of Hedge Fund Investors In Q1 2024: 48

Deere & Company (NYSE:DE) is the well known American industrial machinery company that sells excavators, harvesters, and other similar equipment. Its machines target both the farming and construction industries, so if you’ve read the introduction to our piece, you’ll understand how the environment is muted for Deere & Company (NYSE:DE). Consequently, it’s unsurprising that the shares are down 13% year to date. The slowdown in the farm industry has hit Deere & Company (NYSE:DE) hard, as it announced in July that it will lay off nearly 600 employees as part of a bid to shift its production to Mexico and cut costs. The decision came after a disappointing second quarter earnings report which saw the company report a 15% annual revenue drop. This was Deere & Company (NYSE:DE)’s third consecutive quarter of a revenue drop, and while its adjusted revenue of $13.6 billion beat analyst estimates of $13.26 billion, Deere & Company (NYSE:DE) also cut its full year guidance to $7 billion from an earlier midpoint of $7.62 billion. However, Deere & Company (NYSE:DE) has a market capitalization of $96 billion after its share drops and cash reserves of $8.4 billion. Its receivables of $58.7 billion also provide it with a lot of room to weather the current storm and start to grow once the agriculture cycle normalizes.

Oakmark Funds mentioned Deere & Company (NYSE:DE) in its Q1 2024 investor letter. Here is what the fund said:

Deere & Company is a leading manufacturer of agricultural equipment with dominant market share in North America and Brazil. Despite its brand strength, technological capabilities and distribution advantages, the company’s stock price has recently fallen due to fears about a downturn in the agriculture business cycle. Longer term, world population and food demand are expected to increase annually yet land and labor devoted to agriculture are expected to decline. Deere seems well-positioned to benet from this dynamic as farms will have to become more productive. We were pleased to purchase shares in Deere at a low double-digit multiple of our estimate of normal earnings power.