Deere & CompanyDE

As economies in Brazil, India, and China continue to develop, we expect their wealthier populations will demand higher quality food. To keep pace, farms in these countries will require more-advanced forms of agricultural equipment.

Corn-based ethanol is increasingly used as an alternative form of fuel in the United States, creating a floor for corn demand that bolsters farmers' incomes.

Deere's finance arm has typically required a substantial down payment on new equipment sales, and John Deere machinery generally holds its second-hand value well. As such, we don't expect Deere Credit to face meaningful write-offs, even as the agricultural equipment market has weakened.

Russia holds 8% of the world's arable land, but only 25% of this acreage uses modern farming techniques as found in North America, creating a sizeable growth opportunity for advanced-equipment manufacturers such as Deere. Read more 

Historically, residential construction has driven demand for about a third of Deere's construction segment. As such, the business began to decline in late 2006--far ahead of other construction-equipment manufacturers.

Deere holds a large, underfunded pension fund that will face substantial cost increases in 2010 due to lower discount rates.

Many of Deere's machinery suppliers also supply automotive equipment manufacturers. Another downturn in this industry could threaten Deere's production timing or bottom line.

Deere's operations are highly cyclical, and can also face unpredictable headwinds such as weather. Read more