Warren Buffett Owns $1.3 Billion Of This Top Pick
One company has been around since the 1800s and is the ultimate “crash protection” stock. Another turned every $1,000 invested in 1972 into more than $2.6 million. Still another might just be one of Warren Buffett’s new favorite stocks (he owns $1.3 billion worth).
#-ad_banner-#Welcome to the Top 10 Stocks For 2016.
We’ve mentioned this report in previous articles on StreetAuthority. But today, I’d like to give you a taste of this year’s report by discussing one of the picks in particular and why it made this year’s list.
But first, you should know that we’ve been issuing this report since 2003. And during that time — through raging bull markets, the Great Recession and global uncertainly — the picks delivered by our report have been among the most profitable we’ve ever uncovered.
With that kind of track record, coming up with winning picks every single year to keep the streak going can be a tall order. Luckily, we’re confident in this year’s picks because they share three distinct advantages over the average stock that make them uniquely positioned to weather storms on the horizon and beat the market in 2016.
They essentially boil down to this:
– Irreplaceable assets
– Excellent customer loyalty
– Generous dividends and buybacks
When you find a company with all three of these traits, you don’t have to worry about bear markets, flash crashes or rising interest rates. You have a stock that’s worth owning “forever.”
Today, I’d like to share a special preview of this year’s report by giving insight on one of this year’s picks.
Revealed: Top Stock # 6
Deere & Company (NYSE: DE) traces its roots back to 1837, when John Deere, at the age of 33, began to make farm tools. Today, Deere is a $36 billion company in terms of annual sales and is one of the most iconic brands in American history. The company’s green and yellow tractors, mowers, combines and construction equipment can be found in more than 100 countries.
Any company that has survived for nearly 200 years through numerous depressions, panics, boom cycles, World Wars and bubbles is worth consideration as a “forever” stock.
But it’s not the history of the company that makes it appealing.
Let’s go back to that $36 billion annual sales figure for a second.
That was the headline number from 2014, and it was down slightly from 2013. This, along with depressed commodity prices globally, has led many investors to (incorrectly) assume that Deere is in trouble. But as Chief Investment Strategist Dave Forest points out to Top 10 Stocks subscribers, a deeper look into the company’s financials shows that nothing could be further from the truth.
The cost of a large tractor or harvester can easily run into six figures. That’s a tough bill to swallow at one time for most farmers and contractors, so Deere provides customers with loans through its own in-house financing arm.
Right now, Dave says, Deere only needs to let time take its course, and $35 billion worth of current accounts receivable will flow through the door.
I think Dave is onto something here. Despite flat sales numbers and lower earnings, Deere has been able to bring in just over $4 billion in operating cash flow for the trailing twelve-month period — 14.4% higher than the $3.5 billion it brought in during fiscal 2014. (Deere reports fourth quarter earnings on November 25.)
It may take some time for Deere & Co. to navigate through the current rough patch, but this company has seen it all throughout its long history. It’s clear management knows what it’s doing and is focused on delivering where it counts during challenging times: bringing in cold, hard cash for the company.
The time may be ripe to wade in to this “forever” stock. Deere trades for a price-to-earnings multiple of 12.0 — slightly more than 33% below the S&P average of 18.5.
On a cash flow basis, the company looks even more undervalued. Shares currently sell for a price-to-cash flow multiple of 6.7 — two thirds below the stock’s 5-year average of 20.9.
The stock also yields a respectable 3%. Deere has paid a growing dividend for over 40 straight years and even raised it during the 2008 recession. Less than 1% of stocks can boast anything close to that kind of safety and growth.
Here’s another interesting item worth noting… Deere & Co could also be one of Warren Buffett’s favorite new stocks. According to SEC filings, he began purchasing the stock during the third quarter of 2012. His initial purchase was nearly 4 million shares at an average price of $78. And since then, he’s steadily added to his stake and has never sold.
He now owns $1.3 billion of Deere.
Because of this “worry-free” performance, many of the world’s greatest investors — including Warren Buffett, Carl Icahn, Donald Yacktman and others — have owned shares of “forever” stocks for years, using them to profit in any sort of market. That’s why stocks like Deere — along with the others in Dave’s report — are the stocks to own in 2016, and beyond.
I invite you to check out our special presentation on the Top 10 Stocks For 2016. You’ll not only be able to gain access to this year’s picks, but the insights Dave offers could also make you a better investor. It’s quite possibly the most important piece of research we’ll put out this year. To get your hands on Dave’s Top 10 Stocks For 2016, simply follow this link.