Deere Stock Growing Like A Weed; EPS Soared

Agricultural equipment giant Deere (DE) is crushing it, with a 124% surge in profits last quarter on a hefty gain in sales. Its stock formed a cup-with-handle pattern recently and it may just be waiting for the market turbulence to stop before possibly breaking out. On Wednesday, the Relative Strength (RS) Rating for Deere stock climbed to 72, up from 67.

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Deere Stock Key Ratings, Fundamentals Shine

The raised 72 RS Rating means that Deere stock is outperforming 72% of all stocks on price performance. It’s a good but not yet great rating. CAN SLIM investors look for stocks with an 80 or higher RS rating when searching for the best stocks to buy and watch. But check out its top-notch fundamentals and other ratings.

Last quarter earnings for the watchlist candidate popped 124% year over year to $6.55 per share, on a 32% rise in revenue to $12.7 billion. The prior three quarters its EPS grew 20%, 16% and then 81%. Sales growth during that period accelerated from 11% to 22% and then 37%.

Just as impressive is the Moline, Ill.-based company’s technical strength. It boasts a best-possible 99 Earnings Per Share Rating, putting it in the top 1% of all companies for recent and long-term profit growth. It also sports a 95 Composite Rating and an A SMR Rating (sales+profit margins+return on equity) on an A to E scale with A superb and E dismal.

Big Money Investors Still Cautious

One yellow flag to watch is the E Accumulation/Distribution Rating, a gauge of buying by big money investors like ETFs and mutual funds. The E rating for Deere stock shows that institutional investors will need more convincing before they get on board with Deere. Look for that rating to improve to a C or better.

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Deere stock was down fractionally Wednesday afternoon at about 400. It’s trying to complete a flat base with a 448.50 buy point. See if it can break out in volume at least 40% higher than normal.

Deere earns the No. 2 rank among its peers in the Machinery-Farm industry group. AGCO (AGCO) is No. 1 and Alamo Group (ALG) is No. 3 in the group. The group itself is a middling No. 84 on IBD’s list of 197 industries.

Please follow James DeTar on Twitter @JimDeTar 

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