If You Invested $10,000 In Deere 20 Years Ago, This Is How Much You Would Have Today

The answer is $170,000. That's how much you'd have now if you'd invested $10,000 in Deere (NYSE: DE) 20 years ago. It's a super return for a large-cap company, as elephants aren't supposed to be able to gallop. Moreover, what's remarkable about Deere's stock performance is its tripling over the last five years. The company has been doing something right, because its returns dwarf those of the S&P 500 and its peers like AGCO and CNH Industrial. Here's a look at what makes the agricultural machinery company so unique.

Why Deere's stock has outperformed

There are a few key reasons why Deere has outperformed in recent years:

• After half a decade in the doldrums, the prices of key crop commodities like soybeans, corn, and wheat have increased significantly over the last few years (see chart below).
• The company's leadership in smart farming solutions has added a significant amount of value to its equipment and kept farmers loyal to Deere's equipment.
• Management's acquisition policy has been excellent in building its precision agriculture (smart farming) business and diversifying its end markets by acquiring a major road construction equipment maker, Wirtgen, in 2017.

As noted above, crop commodity prices have risen to historical highs recently, which is excellent news for crop farmers. It's also great news for Deere because it encourages farmers to replace aging equipment. It's also timely because it coincides with a period when Deere is aggressively rolling out its precision agriculture solutions -- more on that in a moment.