DEERE INVESTORS WAITING TO SEE WHICH OF THE TRADING RANGE BOUNDARIES WILL FALL

Deere & Co. (NYSE: DE) stock has been good for buying dips and selling rips – the recommended strategy for dealing with a "trading range" stock. The company is stuck in a situation where the condition of the global economy and a rising US Dollar are weighing heavily on the stock. At the same time, technical factors occasionally bring in the buyers to stop the downside momentum. What factors will win out – the bearish fundamentals or the occasionally bullish technicals? Let's take a look at the numbers to see…The bullish take on Deere…• Some cheap valuation metrics:o An enterprise value of $63.12 billion versus the stock's market capitalization of $29.87 billiono Price-to-sales of 0.85• Decent management effectiveness ratios:o Return on assets of 4.58%o Return on equity of 31.00%• Net profit margins of 8.24% that spin off $1.54 billion in positive levered free cash flow annually• A good short-term financial position as evidenced by the current ratio of 2.29• A Treasury-beating dividend yield of 2.7%The bearish take on Deere…• Some very rich valuation metrics:o A PE of just over 16 with flat to slightly negative revenue and earnings estimates for next yearo A price-to-book ratio of 3.61• Huge amounts of debt to service:o Cash of only $3.44 billion versus debt of over $36.7 billiono A debt-to-equity ratio of 444.88%The technical take on DE shares…Technicians note that DE shares are really in the middle of "no man's land". There appears to be a trading band with $95.05 and $79.50 as the upper and lower boundaries. The stock does have some shorter-term support at $84.29. Above $95.05, the next resistance for DE will be $99.24. Technicians typically recommend to buy near support and sell near resistance in such a "trading range" situation.Overall…Deere does not yet offer enough of a valuation play for bargain seekers to come in and buy the stock. Perhaps if the stock drops to $84.29, the bulls will step in and begin to buy. If the stock then drops to $79.50, more heavy waves of buying should take place. The worse the markets trade in general, the more money will flow into the US Dollar-denominated fixed income and out of risk assets like the euro. That phenomenon should mean more trouble for a stock like DE.