DEERE & COMPANY SELL @81.20

Stock Code DE

Once a darling of the stock market. Looking into the key performance ratios, DE stands very strong on its EPS for the last 5 years. Steady growth for such a massive company with increasing sales and net income. The major drawback will be the operating cash flow in 2010.

DE decision to replace and buy massively on machineries, its venture into new markets may prove a risk if its ventures are not successful. The decline in 2010's cash flow may be related to its acquisition of shares.

An impressive 44% return on equity may be a major advantage but may not be convincing enough for stock pickers. With DE heavy on debt, managing cash flow may be an issue. This massive debt figures will continue to look at you in the eye for the coming years ahead while you wonder if the sales figures will ever recover fast enough to catch up with the declining cash flow.

Even at an undervalued price of 83 by Graham's IV, my estimate on this is on the contrary.

My estimates of 45 will signal an immediate sell.

My strategy for this will be a butterfly spread.