Deere investments look ‘transformational’ for company, trader says ahead of earnings

Deere, one of the best-performing industrials, is about to report earnings.

The company, whose stock is up more than 30% this year, will release results before the bell Friday.

Deere is a rare hybrid of industrials and tech. High-profile investor Cathie Wood of ARK Invest sees it as a tech company, even adding it to the firm’s ARKQ autonomous technology and robotics ETF.

Those investments should continue to benefit the company and its stock, says Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors.

“Its investments into agrotech are very real and could be transformational for this company,” Sanchez told CNBC’s “Trading Nation” on Thursday. “They’re allowing farmers to do precision farming, not just getting the seeds in the ground as fast as possible but putting them in the right place where they have the best chance at growing.”

Deere’s X Series, for example, integrates cameras and artificial intelligence to monitor harvest quality. It has also developed drone equipment.

“It’s something you can pick up right now at 22 times forward earnings,” Sanchez added. “So we think that it not only meets all the conditions of the market, which is that it’s not overvalued, but it also has growth potential.”

Michael Binger, president of Binger Investments, says to be cautious with Deere, though.

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“I fall into the camp where Deere is still an industrial stock, which means it’s still a cyclical stock, and investors look to buy at the beginning of the cycle and sell somewhere at the middle to the end of or the later part of the cycle,” Binger said. “So, I think Deere is doing well in the near term, but you need to be careful.”

He warns that higher inflation prices, if they prove temporary, could give the stock a short-term lift before falling back.

“Buying at this point, after the stock has run from $100 to $400, pulled back a little bit, I would be very wary of stepping into a sell-the-news type of situation,” Binger said. “So if you don’t own Deere, you missed it. I’m sorry, but don’t step in at this point.”

Deere has risen 150% in just the past 12 months. It has pulled back from highs earlier this month, though — shares are down 11% from that peak.


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