Deere & Company (NYSE:DE) offered up sizzling quarterly-results in mid-February. The market hasn’t cared. Since then, Deere stock is down almost 10%. To be fair, the S&P 500 itself hasn’t been so healthy since February either.

That said, Deere’s results were so strong that you’d expect the stock to be near the highs. With Deere stock at just 13x forward earnings, it’s clear that the market is unconvinced that its recent results will continue in the future. That’s a valid concern. Deere stock bulls have plenty of good responses though. Let’s dive into the arguments.

Deere Stock Cons

Steel Tariffs: Generally, Trump’s economic policies are a net positive for Deere stock. But it’s not all good news. The Trump administration has proposed tariffs that could dramatically increase the price of steel for American manufacturing firms.

More than half of the cost of goods sold for companies such as Caterpillar Inc. (NYSE:CAT) and Deere comes from raw materials. Steel surely accounts for a sizable chunk of that. So Deere is likely to have to pay more for steel until the day that the tariffs may be repealed. And Deere will have limited ability to raise prices to adjust for the higher cost of steel, as foreign competition won’t be impacted by the tariffs.

Sales Growth Will Slacken: Deere reported a great first quarter. But this may be deceptive. Potential customers had two reasons to order more heavily in the first quarter as opposed to the fourth quarter of last year.

The first of these was that the upcoming law change incentivized spending money post-tax reform. Companies that waited until tax reform became law to order equipment benefited from lower tax rates and more favorable handling of depreciation. Additionally, the threat of steel tariffs is now likely driving customers to order now before prices go up. So while Deere and other heavy industrial companies are reporting great numbers, realize that there is a bit of artificial demand at the moment.

Low Grain Prices: The commodity grains have suffered low pricing for years now. To give one example, the Teucrium Wheat Fund (NYSEARCA:WEAT) has lost nearly two-thirds of its value over the past five years. Corn and soybeans have both fared little better. In all, it’s been a monster bear market for major agricultural commodities, and there’s little sign of a trend change yet.

As a result, farmers are struggling. Land prices, which had been booming, are now showing weakness. All in all, these period of prolonged lower grain prices is taking a big bite out of the agricultural economy and acting as a persistent headwind for Deere stock.

Deere Stock Pros

Great Earnings Report: The company put in a great quarter. Deere grew top-line sales by 27%. Even after backing out of the effect of acquisitions and foreign exchange, Deere managed 19% sales growth.

Now, as mentioned in the cons, some of this effect is transitory. Sales driven by tax law changes and fear of tariffs are unlikely to continue beyond the next quarter or two. That said, organic sales grew 19% this quarter, and the company has guided to 14% for the whole year. That isn’t as great as 19%, but it’s still quite good. For a company at 21x trailing and 14x forward earnings, 14% sales growth is promising indeed.

More Mouths To Feed: The long-term story for Deere stock is both simple and compelling. The world population continues to boom. The U.S. Census Bureau estimates that the world population first hit 4 billion people in 1974. Just 38 years later, we reached 7 billion for the first time — nearly double.

The population growth rate is slowing as birth rates fall in developed countries. Still, forecasts peg the world’s population as likely to rise to the 9-10 million range in 2050. While grain prices have struggled over the past five years, they eventually need to go up. The demand for food is only going up as humanity continues to expand its ranks.

Still Relatively Cheap: Deere stock has run up a ton over the past year. As a result, many investors look at it and think the best part of the move is already over. But that might not be the case.

Particularly given the recent 10% correction, Deere is a intriguing prospect at 14x forward earnings. And while Deere stock has been on fire over the past year, that comes after a long period of doing nothing. Deere stock first hit 90 in 2008 and 100 in 2011. Since then, the stock is only up modestly (50-60%), while the broader stock market has roared higher. That leaves room for Deere stock to make up for lost time and close the valuation gap.

Verdict on Deere Stock

These are exciting times for industrial equipment makers such as Caterpillar and Deere. A confluence of policy changes have triggered a massive rush of customer orders. Deere’s first-quarter results were nothing short of outstanding. Yet the stock market merely shrugged. Clearly investors aren’t sold on the idea that Deere has entered a new era of prosperity, leaving the stock at 14x forward earnings.

To be clear, this is a momentum trade, and could turn lower if Deere’s sales growth tapers off faster than expected. But for now, the evidence favors remaining on the bullish side of Deere stock. Second-quarter results are likely to be strong, and Deere stock has more room to move when they come in.

At the time of this writing, the author held no positions in any of the aforementioned securities. You can reach him on Twitter at @irbezek.