The S&P 500 is down 3% over the past month, amid concerns about the conflict in the Middle East. It’s close to the lowest level so far in 2026, but that doesn’t mean all the constituents are doing badly. In fact, one stock has caught my eye that’s bucking the broader trend.
A farming favourite
I’m talking about Deere & Company (NYSE:DE). The stock is up 23% already this year, bringing the one-year return to 19%. For reference, the company is one of the world’s largest manufacturers of agricultural, construction, and forestry equipment.
The short-term move higher comes on the back of Q1 results a few weeks ago. Revenue grew 13% versus the same period last year, beating analyst expectations. Construction and Forestry sales popped 34%, with operating profit from these areas more than doubling. Even though the business said demand for large tractors and harvesters is still soft, it raised its outlook for overall net income for the year.
The key factor in the performance that investors cheered on was commentary from management that 2026 could mark the bottom of the agricultural equipment cycle, implying potential growth afterwards.
Cyclical demand improving
I don’t believe the pop so far this year is the end of the story, but rather just the beginning. If the next cycle is indeed just about to begin, it could spell a multi-year rally for the share price. It has already been implementing cost-cutting initiatives to protect margins, so it’s not in a weak position as the new cycle starts. Therefore, it’s well-placed to take advantage when things do get going.
Another factor that I like is the development of the farming sector and how Deere can make money in different ways. For example, farmers are increasingly adopting data-driven farming systems. This means that Deere can make money from selling software and other related subscription services. As a result, it creates a recurring revenue ecosystem similar to software companies.
Finally, the company is largely insulated against concerns such as the Middle East conflict. Even though we could argue about supply chain disruption, as a whole the business can survive easily even if geopolitical events continue to disrupt the world this year.
The bottom line
Of course, there are still risks. The company is exposed to commodity prices via crops. Lower crop prices reduce farmers’ income, which can delay equipment purchases. This is a concern going forward and it isn’t something Deere can do much about.
Overall, I think the move higher in the share price in recent weeks, as the broader index has come under pressure, is a good indication of how favourably investors are treating the company right now. I think this could be the start of a longer-term move higher, and therefore think it could be considered by others who agree with my thinking.
