Deere & Company (DE): Reaping the benefits of a good reputation

There are some industries where the most valuable asset a company can have is brand loyalty and good customer service. For most farms, equipment has to have a long life to justify its purchase, making customers less likely to go for a quick bargain or an unknown brand. A familiar name with a long reputation is key in this kind of market, and Deere and Company (NYSE: DE), which has been making farm equipment since 1837, is arguably the most trusted name in the industry for making a quality product. It also has a stellar reputation for good customer service, with an extensive dealer network that allows machinery to be serviced with a quick turnaround, meaning less downtime for farmers.

Of course, a company like Deere is always at least marginally dependent on the strength of the agricultural market, but right now, farming is going (and growing) strong and should continue to do so through 2008. Agricultural revenue is up 24% in North America, where Deere controls over 50% of the Ag market, and Deere's been harvesting solid income with sales especially strong in the big ticket, high margin items, like combines and 100hp tractors. The South American market, especially in Brazil, is also booming, where Deere is making good progress against the market leader AGCO.