We recently compiled a list of the 13 Best Farmland and Agriculture Stocks To Invest In According to Hedge Funds. In this article, we are going to take a look at where Deere & Company (NYSE:DE) stands against the other farmland and agriculture stocks.
Revolutionizing Agriculture: Technology in Modern Farming
The farmland and agriculture sector is crucial for global food security and economic stability. As the world population continues to grow, the demand for food increases, necessitating innovative practices in agriculture and farming. Recent trends indicate a significant shift towards technology-driven agriculture, which aims to enhance productivity while promoting sustainability.
In the first quarter of 2024, McKinsey surveyed around 4,400 farmers across Europe, India, Latin America, and North America to understand the factors influencing their profitability and technology adoption. The firm conducted a similar survey in 2022. The findings indicate that while farmers are increasingly adopting technology, the pace remains slow, with a three-percentage-point rise since 2022 in those using or willing to use at least one new digital tool to improve operations.
READ ALSO: 8 Best Fertilizer Stocks To Buy Now and 10 Stocks with Consistent Growth to Buy.
North American farmers lead in technology adoption. In the US, 61% of farmers are using or willing to adopt digital agronomy. Additionally, 51% are using or willing to adopt precision agriculture hardware, and 38% are adopting remote-sensing technologies. Latin America showed the most significant growth in technology adoption, with a remarkable ten-percentage-point increase from 2022 to 2024. Farmers around the world are more inclined to adopt new technologies that directly improve operations. According to the data, digital agronomy and precision agriculture hardware are the most popular technologies around the world.
The survey highlights that in the US, larger farms are 45% more likely to adopt agricultural technology compared to smaller farms. This trend can be attributed to the greater scale needed for a favorable return on investment (ROI) in agtech. Despite the challenges posed by rising input costs and extreme weather conditions, farmers are looking towards sustainable practices and innovative technologies to enhance their productivity and profitability. Organizations that provide technology and services have a unique opportunity to cater to farmers’ diverse needs across different regions.
Our Methodology
To compile our list of the 13 best farmland and agriculture stocks to invest in according to hedge funds, we used the Finviz and Yahoo stock screeners to find the largest farmland and agriculture companies. We also reviewed our own rankings and consulted various online resources.
From an initial pool of more than 30 farmland and agriculture stocks, we focused on the top 13 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 13 best farmland and agriculture stocks to invest in are ranked in ascending order based on the number of hedge funds holding stakes in them, as of Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Deere & Company (NYSE:DE)
Number of Hedge Fund Holders: 41
Deere & Company (NYSE:DE), also known as John Deere, is a prominent American manufacturer specializing in agricultural, turf, construction, and forestry equipment. The company is well-known for its innovative technology-driven products, such as the Autonomous 8R Tractor, See & Spray systems, and E-Power Backhoe. Deere & Company (NYSE:DE) ranks among the best agriculture stocks to buy.
In the fourth quarter of fiscal 2024, which ended on October 27, 2024, Deere & Company (NYSE:DE) reported a net income of $1.24 billion, or $4.55 per share. This represents a significant decline from the $2.36 billion earned in Q4 2023. For the full fiscal year, net income dropped to $7.1 billion, down from $10.16 billion in fiscal 2023. Despite these declines, Deere & Company’s (NYSE:DE) margins in 2024 remained strong, exceeding 18%, reflecting improvements made since adopting its smart industrial operating model in 2020.
Deere & Company (NYSE:DE) faced challenges this year, with worldwide net sales and revenues falling by 28% in Q4 to $11.14 billion, and a 16% decrease for the full year at $51.71 billion. These declines were primarily due to reduced shipment volumes across various segments, including a 38% drop in Production & Precision Agriculture sales. However, Deere & Company (NYSE:DE) has proactively adjusted its operations to better align with current market conditions.
Despite these setbacks, the company continues to invest heavily in research and development, maintaining record levels of spending to drive innovation and product development. In 2024, Deere & Company (NYSE:DE) introduced a variety of new and exciting solutions, including connected machines, engaged acres, and Autonomous Acres. The company’s See & Spray technology has successfully covered over one million acres this year, significantly reducing herbicide use by an average of nearly 60%.
Overall, DE ranks 2nd on our list of the best farmland and agriculture stocks to invest in according to hedge funds. While we acknowledge the potential of DE as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
