A year ago, the only green around long-depressed Deere & Co. (DE) was the paint on its famous tractors. But sales at this manufacturer of agricultural equipment are growing as the economy emerges from the doldrums, and it stands to reap plump profits.

For many years, farmers were too strapped to replace aging combines and tractors. That explains why business stalled in the 1990s despite the boom in the rest of the economy. Deere responded by closing plants, slashing inventories, leaning on suppliers and improving the quality of its products.

Now, with interest rates low and crop prices healthy, more farmers are in the showrooms. Revenues are rising 11% annually, compared with relatively flat sales from 1998 to 2002. Add in price boosts and new tax breaks on heavy equipment, and lean-and-mean Deere is on the move. Lest you fear farmers' fortunes are too iffy, Deere also makes construction equipment, lawn tractors and landscaping machinery. Those businesses, plus its credit arm, bring in half of sales.

At $55, Deere has rallied from its 12-month low of $38 in March. Some experts see Deere hitting $60 within a year. That would be a decent gain. But given that analysts see a continuing surge in earnings -- $2.71 per share for calendar 2003 and $3.51 next year, up from $1.76 in calendar 2002 -- the stock could easily exceed that target. Just keep pulling for higher wheat prices.

--Jeffrey R. Kosnett

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