Deere & Company

01/06/2015 7:00 am EST


Stephen Leeb

Founder and Research Chairman, Leeb Group

One of the most serious challenges facing the world is a lack of sufficient food for much of the global population, suggests Stephen Leeb, editor of The Complete Investor.

Some peer-reviewed studies estimate that crop yields will need to double in the next 30 years to feed a growing global population.

One US company with the most to offer in this area is Deere & Company (DE), the world’s leading farm equipment company and our top conservative idea for 2015.

Deere produces a line that ranges from sprayers to heavy tractors. We think it should be a core holding in virtually every investor’s portfolio.

The market values the shares as if Deere were a heavy construction company, not a growth stock. But since the beginning of this century, there has been only one year in which Deere’s earnings declined.

And while full-year 2014 earnings are down, growth over the next five years should average around 15% a year.

Deere’s growth bona fides come both from its balance sheet metrics—which include return on equity consistently above 20% plus high and rising operating margins—and from its focus on research and technology.

With a P/E of about 11 and a case for strong growth that could easily last more than a generation, Deere is compellingly valued and we recommend buying it aggressively.

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