There are no safe havens in the stock market. Every stock carries risk. But some less than others. This column features stocks that have shown one or more of the following characteristics: less volatility, better earnings, larger market caps, safe and increasing dividends. In these times of turmoil, our goal is to show readers better opportunities for investing with fewer risks.

April 25, 2011 - Deere & Company (DE-NYSE) provides products and services primarily for agriculture and forestry worldwide. The company operates in three segments: Agriculture and Turf, Construction and Forestry, and Credit.

The Construction and Forestry segment offers a range of machines and service parts used in construction, earthmoving, material handling, and timber harvesting, including backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; and log skidders, feller bunchers, log loaders, log forwarders, log harvesters, and related attachments. This segment markets and services primarily through independent retail dealer networks and retail outlets.

The Credit segment primarily finances sales and leases of new and used agriculture and turf equipment, as well as construction and forestry equipment. This division also provides wholesale financing to dealers of the foregoing equipment, provides operating loans, finances retail revolving charge accounts, and offers certain crop risk mitigation products. The company was founded in 1837 and is based in Moline, Illinois.

Deere got hit in 2009, saw revenues tumble to $20.756 billion after reaching $25.80 billion in 2008. Last year, they rebounded, going to $23.6 billion. This year, 12 analysts have a consensus estimate of $28.28 billion, up 20%. For next year, they see another 9.3% increase to $30.91 billion.

Earnings tracked right along with revenues, dipping to $2.82 in 2009 after reaching $4.70 in 2008. In 2010, they recovered to $4.35. This year, 19 analysts have a consensus of $6.23, up 43%. In 2012, they're expecting $7.23. Second quarter earnings (fiscal year ends in October) should show $2.05, well above the $1.58 in last year's second. Earnings will be out in late May or early June.

Western Europe's sales improved. Grain prices are going higher, and those farmers are like all others: they want new equipment when they can afford it. In March, revenues climbed by double digits for Agriculture sales. The same was true for Construction and Forestry products.

There's no question food prices are going higher as demand continues to rise. That means more planting as farmers look to take advantage of higher prices. Demand for food grows stronger as the world's population continues to increase. 2010 was a low yielding year for corn so expect those prices in particular to remain high as supplies are tight. Wheat prices will also stay high as a drought in Russia and wet planting conditions in Canada hurt wheat production last year. Soybean demand, particularly in China, will keep tractors rolling in Brazil, the U.S. and Argentina.

Deere is ready. In the first quarter (ended in January), production tonnage rose by 41% compared to the same quarter last year. Management sees such strong demand in Europe and South America as well as increased orders in Construction and Forestry that it doubled its forecast for worldwide production tonnage to 16%. Expect higher raw materials prices as well but those shouldn't be larger than the higher retail prices and volume increases expected in 2011.

Essential numbers: Trailing P/E is 19 but Forward P/E is 13. Price to sales ratio is 1.47. Price to book is 6.10. Book value is $15.63. Operating margin for the last 12 months was 13.13% and Profit margin was 7.83%. Return on Equity was a remarkable 37% and Return on assets was 5.35%. There are 421.04 million shares Outstanding with a Float of 420.64 million. Institutions have 72.30% of the stock. The annual dividend is $1.40 for a yield of 1.50%.

Conservative investors should like the high cash balance (almost $4 billion) and the strong earnings recovery. Financial Strength is A++. As long as global economies continue to gain strength, expect increasing demand for food which means more sales for DE.

- Company Web site: www.deere.com

- Ted Allrich