Agricultural equipment manufacturing giant John Deere (NYSE: DE) was founded in Grand Detour, Illinois in 1837 when the company's founder, John Deere, had moved to Illinois from Vermont in order to escape bankruptcy. In Illinois he founded a blacksmith shop and began to sell steel plows, which became extremely popular. Today the company is one of the world's preeminent manufacturers of agricultural equipment. It also has a small financial services arm to assist purchasers from its main manufacturing division.
While the company is by far the largest company of its kind in the United States, it is also expanding internationally. John Deere India specializes in making smaller, lower horsepower tractors more suitable to the Indian market. John Deere India plans to double its market share in the next couple of the years which will help the company grow, though the Indian Market will still only represent a small percentage of John Deere's overall sales.
Recently John Deere has also won the National Purchasing Partners Government Division contract, a purchasing organization which gives members (local municipalities which need construction equipment) cheap access to John Deere equipment. This three-year contract will directly help John Deere's bottom line by increasing sales. The company is also investing in making bigger, more efficient tractors for farmers seeking greater efficiencies. John Deere's new High Capacity Nutrient Applicator can apply fertilizer at a rate of 1100 pounds per acre and can add up for four different products in a single pass through a field. This new tractor also has superior handling and steering and is equipped with "AgLogic" software which connects tractor fleets and allows farmers to optimize tractor use.
The company stock performance is connected with the price of corn, one of the principal crops for American farmers. In the last year corn futures have decreased by nearly 25% and are currently at their lowest level in five years. Other grains like soybeans and wheat are also performing poorly. This bodes poorly for John Deere but the company has responded by laying off some workers at some of its largest plants, which will help ease the pain for the company. Investors should watch for an increase in grain prices, which will lead to a corresponding increase in the price of John Deere stock.