Investors looking at the results from machinery and component companies like Caterpillar (NYSE:CAT), Cummins (NYSE:CMI) or Deere (NYSE:DE) may think there's a bottomless demand for heavy-duty equipment these days. To be sure, strong agricultural markets are encouraging farmers to spend on equipment, while a torrid pace of construction in the developing world is likewise gobbling up machinery almost as fast as its manufactured. Deere is just as cyclical as it has always been, but investors optimistic on ongoing global growth may yet have more to reap here. (To know more about cyclical stocks, read: Cyclical Versus Non-Cyclical Stocks.)
A Powerful End to a Successful Year
Deere reported 20% revenue growth for its fiscal fourth quarter, as modest price increases coupled with double-digit tonnage growth drove a successful result. Sales in the large agriculture and turf business were up 18%, while the construction business saw 34% growth on 37% tonnage growth. Although growth outside the U.S. and Canada was much stronger (27% in constant currency), homegrown growth of 14% was hardly poor.
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