The tractor company is up 20 percent over the past six months, while Caterpillar languishes in the red.
Its outperformance even prompted a downgrade from Bank of America to neutral, its analysts contending that lack of progress in U.S.-China trade talks means the stock may have run as far as it can for now.
Matt Maley, equity strategist at Miller Tabak, said the disparity between Deere and Caterpillar should soon correct itself.
"When you go back over time, you go over the last 10 years, these two stocks have been very highly correlated," Maley said Tuesday on CNBC's "Trading Nation." "Every few years a divergence develops and each time that divergence develops, it usually only lasts for a couple of months and they usually fall back together. Usually the stock that has outperformed comes down and meets the underperforming stock."
In 2011, 2012 and 2014, for example, when Caterpillar raced ahead of Deere it soon rolled over to come back to its underperforming peer. The same thing happened to Deere when it outperformed Caterpillar in 2015. It was a slightly different story in 2017 — Deere rallied and the underperforming Caterpillar caught up to it.
"What I would suggest is that people either want to short John Deere and go long Cat Tractor and for those that can't go short, you might want to underweight Deere and overweight Cat Tractor because that divergence should resolve itself before too long especially now that it's been going on for a couple of months," Maley said.
Mark Tepper, president of Strategic Wealth Partners, instead expects Caterpillar to catch up to Deere and then pass it.
"Deere's valuation looks really stretched right now and Cat looks undervalued and beyond that there's positive catalysts that could take Cat higher but I'm not seeing that for Deere. I think everything good seems to already be priced in," Tepper said Tuesday on "Trading Nation."
Tepper also expects a revival in infrastructure demand and any clarity in trade talks with China to give Caterpillar a big boost.
"We think that demand is really going to revive itself so that's a positive catalyst for Cat and when we see that happen whether it's in China or more likely here in the U.S., that's going to take Cat's stock higher," said Tepper. "Once we get resolution with China both of these stocks are going to rally but Cat is going to do better."
President Donald Trump has said he may extend his March 2 deadline for additional tariffs on China if the two are close to a deal. The two countries are currently in negotiations.