KUBOTA

DE, Deere & Co. and Kubota

Hamilton

The usual then, Oct. 27, 2012, and now charts.

de oct 27 2012DE aug 16 2015

From the, almost 3 year old, blog you can see that we try to keep an open mind. EW is always about alternatives and the waves must show the way. If they do not, it is imperative that you do not draw unwarranted conclusions. Having said that we do think DE is a sell despite the fact that we are not sure what to make of the chart.

It took two years to regain all the losses during the great recession as the stock climbed to an all time high of $98.23. Another four years and the stock still has not been able to do better. Just for the historians among you, I have found some interesting bits of info that show how ridiculous the comparison with the Great Depression really is. From 1930 to 1932 sales dropped from $63 million to $8.7 million. Employment went down by 75% from 4,800 to 1,270 and salaried employees saw their pay cut by about 31%. The local bank was saved after two employees embezzled about $1.2 million and DE generously  injected a similar amount and effectively took over control. (see Sam Moore in Farm and Dairy).

We have referred to the tendency of stocks wanting to get to an even number, particularly $100 , as the Mount Everest phenomenon. If you ever tried that, I have not, you will know that if you do not succeed immediately you have to go back to base camp to recharge. Lately the stock got slightly above $97 so it succeeded at neither. It may still get to, say $105 but we would not hold our breath. About 10+% of the float is now held by shorts which may, for a change, be the right position to take.

If you live in the country enjoying the fresh smell of manure you are always amazed at how little tractors and other machinery is actually used. Most of the big stuff sits idle for most of the year and they do not wear out very fast. The purchase of these $150,000+ machines is consequently entirely discretionary and induced by income/wealth and tax considerations rather than “need”. Prolonged periods of buyer droughts are entirely possible and this would impact the stock. Between here and $105 we would be short this stock.

Kubota supports this view. It has a clear 5th? wave up from the lows measured in Yen terms. It is a formidable competitor with, in my view, a better product.

Kubota aug 16 2015

JP6326 (a.k.a. Kubota)

Hamilton

Kubota is the maker of farm tractors and implements, mostly diesel powered and “small scale”. They are by far the best in their field, so if you are thinking of buying a  Deere, a Cat. or anything powered by Cummings you should  have a peek at how JP6326 has actually done BEFORE you buy into the “runs like a deer” slogan. Here is the chart:

image

Now it does not take a lot to recognize that this might be a “double top”, quite amazing actually considering it took 17 years. Anyway it does not bode well so it behooves one to be doubly on guard before buying John Deere, especially when it is actually made in  Dijon, France or the engine is a Yamaha. Here it is:

de feb23

Now that that does not work it is perhaps a good time to look at Cat after all that is infrastructure if ever there was such a thing or Cummings (CMI). Here is that chart (left) and Cat (right):

cummings

              Cat feb 23

There is a lesson here, rather than doing the same thing three times over and expecting a different result, THINK GLOBAL, or put in a different way, there are very few things under the sun that have not happened sometime before, somewhere. Targets for these stocks are at the lines drawn, for Kubota it is at about 250 Yen. For Cat it is about $15 and DE about the same For full disclosure , I own one, not the stock, the thing itself. I do not have a will but its durability might just induce me to stop procrastinating.