Deere (NYSE:DE) stock has recently fallen following their release of the fourth quarter earnings report that stated total revenue and earnings per share beat analyst estimates. Still, the outlook regarding the first quarter of 2024 fell short of expectations, with net income projected between $7.5 – $7.75 billion and analyst projections of $7.83 billion.
Since this earnings release, Deere stock has dropped by over 6%. Its CEO stated that this less-than-expected net income projection was due to the stabilization of its agriculture product demand compared to strong results in 2022 and 2023.
The agriculture industry is projected to see slower growth compared to the previous years in 2024. This may cause several stocks within the sector to experience slower share price appreciation, which could be a good buying opportunity for investors looking to start investing in agricultural businesses.
Deere’s stock price downturn and a poor outlook for Q1 2024 are driving investors away. Some agriculture companies offer investors an exciting opportunity to buy while these stocks are still trading at a fair valuation. They may be great long-term investments due to their strong dividend yields.
Alamo Group (ALG)
Alamo Group (NYSE:ALG) is an agriculture management and infrastructure business that offers equipment such as tractors, mowers, loaders, snow blowers, street sweepers, snow plows, and cleaning systems for both governmental and industrial purposes. Alamo also offers aftermarket and maintenance services.
Alamo Group is one of the very few agriculture stocks that has remained in positive territory regarding its share price over this past year.
Back in October, it announced the acquisition of Royal Truck & Equipment, a truck manufacturer providing highway safety equipment. As of the end of August 2023, Royal Truck reported $44 million in revenue.
In November, Alamo Group reported earnings for the third quarter of 2023, which beat analysts’ estimates in total revenue and earnings per share. Its dividend yield was also raised by over 18% to twenty-six cents per share.
Following multiple months of positive news surrounding Alamo Group, its share price has risen by 37% within the past year. This sets it apart from other agriculture companies and offers investors a better alternative to Deere.
CF Industries (CF)
CF Industries (NYSE:CF) produces fertilizer products such as nitrogen and hydrogen fertilizers with phosphorous and potassium components for industrial purposes. And it serves wholesalers, traders, and other distributors.
CF Industries offers investors a decent dividend yield of approximately 2.57% annually, which was recently raised back in January by 25% to fifty cents per share. CF’s fourth-quarter earnings were released on February 14, and total sales declined by 40% primarily due to a drop in average selling prices but beat analyst expectations by $70 million. Over the past year, the company’s share price has remained fairly stagnant.
CF Industries offers investors a stable option in the agricultural chemical business that provides a decent dividend yield.
Improved demand for fertilizer products that are expected soon is another reason CF Industries may perform better than Deere in the near term.
CNH Industrial (CNHI)
CNH Industrial (NYSE:CNHI) provides global agriculture and other industrial equipment. Its various brands include New Holland Agriculture, Case IH, Case Construction Equipment, New Holland Construction, and Eurocomach. CNHI also provides equipment financing services.
Over this past year, CNHI has seen its share price fall by 26%, primarily due to a weak revenue outlook. On February 14, it reported earnings for the fourth quarter and full year 2023, which stated that total revenue declined by 2% and net income rose by 4% compared to the year before.
CNH also announced a $500 million share buyback program and that margins are expected to improve after implementing cost-cutting measures.
In the last month, its share price has increased by nearly 7%, with positive news regarding sales resulting from a better pricing model, which has helped increase CNH’s profits.
CNH Industrial is a stock that may not see much upside in the near term, but with its recent cost-cutting strategy taking shape, robust fundamentals, and an attractive valuation. It offers investors a buying opportunity that may become profitable in the long term with a better environment overall for the company.
