A Trump Trade on Deere
04/27/2017 2:49 am EST
One of the most dramatic beneficiaries of the Trump agenda has been Caterpillar (CAT), one of our previous recommendations, notes Mark Skousen in The 1600 Alert, an new advisory focused on selecting stocks poised to benefit from political trends and legislation.
But one that will benefit and likely catch up is Deere & Co. (DE). Based in Moline, Illinois, it is the oldest manufacturer and distributor of agricultural machinery and construction equipment in the United States (founded in 1837).
The company has floundered recently, with sales flat for the year at $26.5 billion and earnings of $1.5 billion. It pays a rising dividend policy and currently yields 2.2%. Deere & Co. has nearly $3 billion in cash, which is plenty to cover its long-term debt of $35 billion.
Stifel, a Wall Street firm, just upgraded Deere & Co. to a “buy,” making the case that, like Caterpillar, it will benefit from increased sales under Trump. It is expected to beat estimates when it reports in May.
Let’s add Deere & Co. to our list of Trump stocks, and set a protective stop of $90 a share. For those willing to take greater risks, consider buying the September $120 call options, which last traded for $2.90 and expire on Sept. 15.