I haven’t written about one of my favorite large-cap companies in several weeks. Meanwhile, Deere & Company (NYSE/DE) continues to tick higher in price.
This stock is up some 14 points in the last few weeks and, even though this company is mature and well-established, you can’t argue with the global fundamentals in the agriculture sector.
Adding to the upward movement in the stock recently was surprisingly strong financial growth from Caterpillar, Inc. (NYSE/CAT). I say “surprisingly strong” because these companies are feeling the weakness in the economy in the domestic market. What’s helping them out greatly is growth in international markets and a falling dollar as compared to other major currencies.
Another company I recently wrote about in this column, Titan Machinery, Inc. (NASDAQ/TITN), is doing great on the stock market right now. It’s up about five points over the last week in anticipation of strong earnings results to be announced later this month.
In my mind, there is clear strength in the heavy equipment industry, and the stock price action in many of these companies is evidence of their outperformance.
At the end of the day, this sector of the economy is outperforming because of the strength of the commodity price cycle. John Deere is selling really expensive tractors to industrial farmers because crop prices are strong. Caterpillar is selling heavy earth-moving and mining equipment around the world because precious metal prices are strong.
Over time, every industry gets its due. I’m really pleased that these stocks are doing well in this market. I guess I never thought I’d be excited about the heavy equipment business!