Sometimes it's better to be lucky than good.

Barron's picked shares of Deere & Co. in July 2025. Things have turned out OK, even as the outlook for U.S. farmers arguably got worse, not better, over the past year.

Deere stock still looks like a winner. And eventually, a cyclical upturn in the agriculture business should help. We recommend holding on to the shares.

We wrote positively about Deere last July, with stock in the iconic farm equipment maker just above $500. Shares closed Thursday, one year later, just below $600. That's up about 19% from the original call but slightly below the S&P 500's 21% return over the same span.

Deere traded above $670 in early 2026 as investors eyed a rebound in farm income that would lead to more tractor purchases. The recovery in farm income, however, never arrived.

U.S. net farm income in 2026 will land at about $150 billion, according to the United States Department of Agriculture, flat with 2025. (Income in 2025 was supposed to be closer to $175 billion, but cost inflation, among other factors, turned out worse than expected.)

Flat income looks OK, but direct government payments are keeping farmers afloat, while oil-derived farm inputs, such as fertilizer, have shot higher. Corn and soybean prices are up year over year, but not enough to overcome all the headwinds.

Now, the world is dealing with a super El Niño, which could be bad or good for crop prices. El Niño events typically lead to greater volatility in crop production.

"El Niño effects vary from event to event, making the whole thing confusing, and sometimes strong doesn't mean more severe impacts, but simply certain aspects likely to happen," says Meilus Research analyst Rob Wertheimer. "Those uncertainties noted, real risks to food security around the world are rising."

That's one reason why Deere technology is critical. It helps farmers increase yield and reduce yield volatility.

Deere stock has managed to hang in despite all of the headwinds. Down the road, the company should still see higher structural margins as it applies AI to help farmers save money by more precise application of crop inputs.

If the stock was down, it might be a tougher call, but given the current setup. There's no reason to abandon shares now. Cost-lowering, yield-improving technology is needed more than ever.

Deere is expected to earn about $19 per share in calendar year 2026, leaving shares trading for about 31 times earnings. Deere, however, earned about $33 in 2023, when the farming environment was better. That number should be higher the next time crop prices and input costs all align to give U.S. farmers a break.

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July 18, 2026 05:01 ET (09:01 GMT)

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