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Monthly Stock Special

The $25 Special is *Deere & Company (DE).... (You must log-in as a subscriber to get this price. The non-subscirber reduced-price is $50.)

Comparison DE (stock of the month) vs SP500 (by Vanguard SP500 Index Fund) in the last 10 years.

 

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Here is a capsule review of our featured stock, provided by Mario Medina.

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Company Information:

Founded in 1837 by John Deere and headquartered in Moline, Illinois, Deere & Co. (DE) is the world’s leading manufacturer of agricultural equipment that operates through three business segments: agriculture and turf, construction and forestry, and financial services. The company markets its products primarily through independent retail dealer networks and retail outlets. Its current total market capitalization of $46.3 billion makes DE a large capitalization stock (a large-cap stock has a market capitalization value of more than $10 billion) and its long history of consistent earnings growth and dividend payments makes it a solid company. It is considered a solid and well-diversified business with a wide economic moat and a sustainable competitive advantage over its rivals that also enjoys outstanding management and corporate culture. Deere & Co. has paid dividends to investors since 1937, and during the past five years has increased its dividends at an average rate of 6.2%. Its quarterly payment of $0.69 per share currently provides a yield of 3.49%.

The value of dividends reinvestment: A hypothetical investment in Deere & Co. has grown cumulatively (including dividends reinvested) 5,339.31% during the past forty years. The same investment has grown only 2,417.48% in the same period of time, excluding dividends. The stock exhibits a healthy Dividend Payout Ratio (DPR is the proportion of earnings paid out as dividends to shareholders) of 35.6%, which means the company is paying out 35.6% of all its net income in dividends and is retaining a large percentage of earnings to reinvest or grow the business. Its average DPR during the past five years is 38.0%. Its Forward P/E ratio of 12.63 is 25.9% below the S&P 500® index forward P/E, and according to Morningstar, the stock is trading 9.7% below its Fair Value Estimate, making it attractive for investors with a long-term investment horizon.

Technically (from the chart’s perspective) DE also looks attractive, trading 17.1% below its 52 weeks high, while it is forming a price consolidation pattern between $175 and $130 approximately, in which $130 is acting as a strong technical support level. The index funds Vanguard Total Stock Market Index and Vanguard 500 Index are major shareholders of DE, holding 2.64% and 1.90% of its shares respectively. The stock is also one of the 63 holdings of the mutual fund managed my Moneypaper Advisors, the MP 63 Fund (DRIPX). DE’s main competitors in the world are Caterpillar Inc. (CAT) and AGCO Corp. (AGCO). DE’s Beta (a measure of the volatility, or systematic risk in comparison to the market as a whole as evidenced by the S&P 500® Index) is 0.89, so the stock is 11% less volatile than the Market.

Best and worst years during the past 40 years: Its best year was 2007, in which DE returned, excluding dividends, 95.9%. On the flip side, its worst year was 2008, when the stock declined 58.9% excluding dividends. Its dividend reinvestment plan charges some fees for cash investing ($3, plus 5 cents per share), for dividend reinvestment (5% with a maximum of $3, plus 5 cents per share) and for selling ($10 plus 5 cents per share). To illustrate those fees: for example, a $100 investment at DE’s current price would cost a fee of $3.03 (or 3.03% of the investment). To minimize the effect of even such small fees, you may want to invest a larger amount but less frequently. The fee for a $300 investment, for instance, would be $3.10 (or 1.03% of the investment). With the stock being fundamental and technically attractive, this company is an appropriate holding for investors who wish to build a holding over the long term.

Disclosure: Mario Medina has no position in Deere & Co., and has no plans to initiate any position in the immediate future. The author wrote the article himself and it expresses his own opinions. The author has no business relationship with DE and this article is not intended as a recommendation to invest as the information published does not take into account any subscriber's personal finances, goals or risk tolerance. Accordingly, you should be aware of all the risks associated with any financial investment and should consult an independent financial advisor for any personal investment advice.

 

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Mario Medina Personal and Professional background:

Born in Cuba and graduated in Architecture from the University of Havana, Mario Medina is editor and writer of the weekly online investment newsletter El Boletín, and senior analyst for Julie Stav, Inc. Through seminars and conferences live and online, DVDs, investment e-books, articles in his blog and financial columns (on www.invierteconmario.com, www.comunidadtudinero.com and www.directinvesting.com), videos and Podcasts, Mario teaches people inside and outside the United States. The point that differentiates Mario in his teachings, is the simplicity and softness of the language, teaching beginners, the same way he wanted to be educated when starting in the world of personal finances and investments.

Mario provides investment guidance in financial segments of Hispanic television and radio, and has had his own radio shows on those topics at Univision Radio Network, also participating in Tu Dinero, Julie Stav’s financial shows and Podcast series (www.revolverpodcasts.com and www.juliestav.com)

Analyzing the status of the market and its indexes, examining leading companies, sectors and industries, and evaluating the performance of Julie Stav’s Platinum List of Companies, his popular online Daily Market Report allows thousands of people from across the country to follow the situation of the financial world and get the essential information they need to make the best decisions about their own investments.

Today, Mario provides independent fundamental and technical analysis for the mutual fund MoneyPaper 63 (DRIPX), which is the only fund that focuses solely in companies that offer small investors Dividend Re-investment Plans. He is also a regular contributor to directinvesting.com.

Today, those who read the articles written by Mario Medina, or those who daily follow his Market Report, listen to his segments, watch his videos, or attend his seminars, could not imagine that a little over a decade ago its author knew nothing about investments or the stock market. It has been a long, arduous road for the young man newly arrived to the US with empty pockets, a suitcase full of dreams, and whose first savings came from collecting empty soda cans and recycling scrap yard. After discovering the world of finance through books and radio programs, and after years of study and sacrifice, Mario Medina now advises thousands of Hispanics on how and when to buy or sell in the stock market in order to obtain the best returns and minimize their losses.

What was the secret that allowed Mario to develop those early, small investments? "I think the key is to save and invest on a regular basis, with clearly defined long-term, diversified goals," he says. "To do so, each person must determine his o her risk tolerance level ... I do not feel comfortable risking as much as other people, and in turn many risk more than me. It is essential to know how far one can get without trying to beat the stock market every day.”

Through his regular segments, articles and analysis, Mario wants to offer everyone his successful strategies so that anyone can make the most of their work, their savings and their investments, and realize their dreams of economic prosperity. Mario Medina’s own dream is to help those interested in managing their money by knowing the risks and investing directly in the very best, teaching them the necessary steps to succeed in the stock market and other investments, participating in it directly and without brokers, so they can manage their money more efficiently and get better returns without paying more fees.

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