Deere & Company (DE): Traders Could Get a Double-Digit Pop in This Iconic Stock

The soon-to-be-reduced tax benefit for buying farm equipment in 2013 is a factor that’s already helped U.S. farm equipment sales rise to their highest levels in three decades, according to The Wall Street Journal.

And, according to the Association of Equipment Manufacturers, U.S. sales of new high-horsepower tractors have grown 11.4% annually since 2006, a figure that represents a tripling of the growth rate between 1999 and 2005. Moreover, sales of four-wheel drive tractors, which are often used on very large farms, have risen approximately 15% annually since 2006.

I expect this tax-advantage buying to continue for the rest of the year. I also expect that buying to boost Deere & Company (NYSE:DE)’s top and bottom lines in fiscal Q4, and that should mean another big earnings beat three months from now. Traders who get in now could see shares jump by 10% or more over the next few months.

Recommended Trade Setup:

— Buy DE at the market price
— Set stop-loss at $77.15, approximately 8% below the current price
— Set initial price target at $92.25 for a potential 10% gain in four months

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