Deere & Co. (DE) announced earnings on Wednesday, and the results weren’t pretty.
Deere cut its fiscal 2014 outlook, as declining grain prices have put a crimp in spending for many of its customers. DE stock has fallen 6.5% in 2014, lagging the market by more than 10 percentage points. Agriculture stocks in general have been looking very weak this year, down almost 2% year-to-date through August 12.
On the surface there appears to be very little to tempt investors into buying “ag stocks” at the moment. Deere stock and the rest of its peers are cyclical in nature, beholden to commodity prices. When prices are high and farmers are flush, that’s when combines and tractors get bought. But now is not that time, leaving ag stocks to twist in the wind. It’s simply the nature of the beast.
That said, I believe the following trio of ag stocks are worth holding for the long run. The recent weakness might be the perfect time for a contrarian buy.