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Pros Bullish for 2012 on Deere’s Strong Q4

Deere & Co. bucked a market selloff on better-than-expected earnings — and “Fast Money” pros were bullish on the company’s 2012 prospects.

Wednesday the farm equipment manufacturer reported a 46 percent increase in net income to $669.6 million for the fourth quarter and earnings of $1.62 per share, beating its $1.44 estimate. Sales spiked 20 percent on sales of $8.61 billion.

Morningstar analyst Adam Fleck said the company still had room for growth in the coming year, with the credit crunch in Europe still somewhat of a concern.

“What Deere is saying in their double-digit growth outlook is that, ‘Hey, even if they plant more acreage, that means more machines, more combines, more tractors, even though that pushes crop prices down a little bit, farm income is still probably going to be good,’” he said.

“Fast Money” trader Steve Cortes noted grain prices had taken a hit over the past few months.

Wheat was down 24 percent over the past three months, while soybeans were similarly 13 percent lower in the same period.

“Certainly, Deere would make less money if crop prices continue to crash in the way that they have,” Fleck said.

Deere, he noted, “saw a 20 percent revenue decline back in the last recession back in 2009 and margins dropped substantially, but they still made money.”

Fleck echoed the company’s forecast of global growth.

“China’s still going to need more food. Emerging markets are still going to need more wheat and grain,” he said. “Deere’s right on the forefront of that.”

(Related Video: Deere Releases Strong Q4 Results)

Trader James Lebenthal also said he saw a strong year ahead.

“The long-term trend in agricultural prices still is up, and as we mentioned, plantings are up,” he said. “I think there has to be a sustained downward trend, which would indicate deflation that there’s just no indication of, for Deere or Caterpillar to come off its sales trends here.”

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Trader disclosure: On Nov. 23, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Karabell is long APL; Karabell is long MS; Karabell is long IBM; Karabell is long GOOG; Karabell is long ORCL; Karabell is long CAT; Karabell is long JOYG

For Zach Karabell
Rivertwice is short XLF
Rivertwice is short SMH
Rivertwice is long IBM
Rivertwice has long calls HPQ
Rivertwice is long QCOM
Rivertwice is long ORCL
Rivertwice is long DE

For Josh Brown
No disclosures

For James Lebenthal
Lebenthal is long C
Lebenthal is long XLF
Lebenthal is long MPC
Lebenthal is long CAT

For Irwin Simon
No disclosures

For Colin Gillis
BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report (AMZN).

BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report (AAPL).

For Adam Fleck
No disclosures

For Mike Mayo
No disclosures

For Chris Tevere
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For Rich Ilczyszyn
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