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Short Caterpillar, own Deere into earnings: Trader

Deere is set to report earnings on Friday before the bell, and it could be a major turning point for the stock.

"What I'm hearing is that the agriculture farm belt is starting to see some demand, that actually some of the dealers in June are reporting revised demand," said "Fast Money" trader Tim Seymour.

Back in May, the agricultural-equipment maker cut its fiscal year net income forecast to $1.2 billion from $1.3 billion. Shares are mostly flat on the year, while its rival Caterpillar is up about 22 percent, making Deere unbelievably cheap, relatively speaking, according to Seymour. But that severe underperformance could be coming to an end.

Seymour points to the stabilization of emerging markets as a driver. "Brazil, which has been a laggard. Latin America has been a big problem for farm, and agricultural equipment is actually starting to show some demand."

"The trade to me is own John Deere, short Caterpillar, look for 10 percent outperformance in the next three months. This stock has underperformed and will recover," explained Seymour.