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The bean counters at Deere? DE AGCO CAT

Deere has been more financially successful than its competitors in part by managing inventory with an admirable build-to-order business model. Recently, that has left it with low inventory which may aid its competitors.

According to BusinessWeek, looks like the bean counters in Moline didn't talk to the bean counters working in the fields. There's not enough product on the dealer's lots.

So what's the problem if you have to wait a little for your Deere? "A farmer who recently has ordered a tractor for crops such as corn and soybeans, which are harvested starting in September, may not be able to get the equipment until December or January..." Competitors like AGCO and CAT may benefit.

Agco and Deere's stock performance track fairly closely over the longer term, (over the past 52 weeks, both are up 52% beating the market by about 12%) Over the past 3 months, Agco has pulled ahead of Deere in stock market performance.

I don't chart, but Yahoo finance says AGCO is above its 50 day and 200 day moving averages which my new "charts for beginners" book says is good. (If Yahoo says it, it must be true, right?)

Agco's bonds just got a boost to investment-grade by S&P, which should help reduce financing costs.

IMHO, either Agco or Deere is a good way to play the next food shortage scare (we are due for some alarmist stories soon with major areas in Asia in drought conditions) or the world economic turnaround. (Agco is somewhat more diversified internationally.)

Expect some volatility, both DE and AGCO sport betas north of 1.6.

Long AGCO, thank you Mr. Deere.

Inventory Angers John Deere Customers
Some farmers bolt as recovery catches the equipment maker short

Disclosure: Long AGCO