Mega-Billionaire Bill Gates Is Loading Up on Deere & Company (DE)

Terex Corporation (NYSE:TEX) is the most volatile of our five stocks with a beta of 3.0. Sales are expected to rise 17% in 2012 and 8% in 2013. This expected increase should be driven by the 2011 acquisition of Demag Cranes that will assist with product diversification. Terex should manage to see similar growth avenues, as that of CAT, but slowing growth in China and a stagnant Eurozone are obviously cause for concern. Billionaire Jim Simons – founder of Renaissance Technologies – was a top investor last quarter, upping his stake by nearly 3500% (check out Jim Simons’s latest picks).

Kubota Corp (NYSE:KUB) expects solid growth that includes 14% revenue expansion in FY2013, based on robust farm equipment demand in Japan. Asian gains are expected to offset weakness in other areas, mostly Europe. Kubota’s restructuring plan should help drive its long-term EPS growth of 12% (annually) through 2017.

To recap: none of the stocks mentioned above trade as cheaply as CAT at 9x earnings. Deere and CNH trade relatively cheap at 11x and 10x, respectively, where Terex (22x) and Kubota (18x) trade at the high end of the valuation range. We see CNH as discounted for a reason; regardless of the Fiat merger, there looks to be weakness in all of its key markets. Gates’s recent bet on Deere is a solid value play, and we are also encouraged by his other big bet on the construction industry: CAT. Unlike Deere, we believe CAT is the best value play at only 9x earnings and a PEG of 0.7. Both industry giants – Deere and CAT – also pay dividends that yield over 2%.