Why CF, Deere, and Caterpillar Stocks Are Quiet Bullish Setups

There are times in the economic cycle when a particular group of stocks makes more sense than others, and today’s market presents investors with one extreme in the economic cycle and the capital and sentiment cycle. Every player in the stock market’s game seems crowded in one area, and that is the exciting technology sector, leaving behind some of the better (if not best) risk-to-reward ratios in other industries.

Some of these names are in the industrial sector, carrying underlying tailwinds that may not be present anywhere else in the market today. The reasoning ties to the overall situation in trade tariff negotiations between the United States and other nations, particularly China.

The outcome of these negotiations will break the current standstill that has gripped the industrial sector, likely unlocking new outlooks and forecasts regarding earnings.

Since earnings per share (EPS) that drive stock prices the most, this new development will likely bring investors (institutional and retail alike) a reason to start looking into the best setups. Considering names like CF Industries Holdings Inc. NYSE: CF, Caterpillar Inc. NYSE: CAT, and even Deere & Co. NYSE: DE should be enough to get investors on the right side of the coming cycle, as well as their portfolios.

Releasing the Agriculture Bottleneck

As it stands today, the agricultural industry has stepped on the brakes, unsure of where demand and supply will come from in this new tariff world. That being said, considering that most supply and trade is conducted with China, this has placed considerable pressure on businesses within the industry.

From manufacturers to supermarkets, the stakes are high, and there is no room for mistakes; however, renewed certainty in the sector can significantly make up for lost time and profits. For this reason, institutional buyers from Inspire Investing decided to boost their position in CF Industries stock by 10.1% as of early June 2025.

After this new placement, the group now holds up to $1.1 million worth of the stock. While it may not be the largest increase or holding, it does give investors some confidence to lean on in this market. Speaking of the market, most participants today also see a reason to pay up for CF stock.

Because it trades at a price-to-book (P/B) ratio of up to 2.1x, CF Industries stock commands a premium above the agricultural industry’s average 1.05x valuation. As seasoned investors know, there is always a good reason for the market to overpay for certain stocks as long as they have the correct narrative.

Follow Value Down to Deere & Co.

If a fertilizer maker like CF Industries is set to do well, then other businesses down the value chain in agriculture would also do well. This is where Deere stock comes into play for those seeking the right opportunity based on fundamentals.

Understanding that the future is bright in this area of the market, analyst Jamie Cook from Truist Financial decided to place a Buy rating on Deere as of mid-May 2025. This rating came along with a price target of up to $619 per share, which, compared to today’s price, would imply a potential rally of as much as 20% for Deere stock.

Following this story to its core, up to $3.3 billion worth of institutional capital has flowed into Deere stock as of this quarter, implying increased confidence and another check for investors to cross in this agricultural bullish play. In the same way that CF commands a premium due to this theme, so does Deere stock.

Trading at a P/B ratio of up to 6.2x today, Deere calls for a steep premium to the industrials sector, with its average valuation of 4.3x. Now, investors can see the trend forming in favor of this space in the market, creating an opportunity to tag along for double-digit upside potential.

A New Bill Helps Caterpillar’s Upside

President Trump has made headlines once again by seeking to increase the government spending budget in what could trickle down to become an infrastructure spending bill; after all, the goal of reshoring manufacturing and creating new semiconductor hubs will need some construction investment.

Caterpillar stands at the front of the line to be contracted as a machinery and equipment provider once these projects get underway, which should be sooner rather than later, considering that billions are already pouring into these projects through various industry players today.

Taking this into account, investors can justify the $3.4 billion worth of institutional capital that made its way into Deere stock in the recent quarter. This is another check to cross in the buildup of a potential bull thesis for these three stocks, which seem to be connected by one overbearing view on the sector.

That would also explain Bank of America’s decision to reiterate a Buy rating on Caterpillar to end May 2025, this time placing a valuation of up to $385 per share on it. This implies that Caterpillar stock should rally by as much as 7.5% from where it trades today, and that’s without baking in the potential benefits from this new spending bill imposed by the government.

Before you consider CF Industries, you’ll want to hear this.

MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and CF Industries wasn’t on the list.

While CF Industries currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Like this article? Share it with a colleague.

Link copied to clipboard.