Adding to an Ag Boom Play

I am going to add 200 shares to my Deere (DE) position now that I've listened to the company's third-quarter conference call. I'll make the purchase after you receive this Alert.

The agricultural boom is alive and well, and the decline in Deere's shares offers a great buying opportunity. The issues in the Deere's quarterly results were solely related to the company's non-agriculture businesses. The company announced price increases and has controlled its inventories in those segments (construction and forestry). I don't expect construction and forestry to improve any time soon, but the robust demand in agriculture plus the correction in input costs will be the driving factors going forward.

Early orders for ag equipment around the world are ahead of expectations, the backlog for large tractors is sold out, and North American combines are 70% booked, reflecting a faster-than-expected rate. Management is raising prices 5- 10% and expects these initiatives to more than offset costs going forward. The lowered guidance for the fourth quarter is due to four factors: a higher tax rate, lower credit income, integration costs from two acquisitions and lower volumes at its construction and equipment division.

The company was not able to purchase more shares in the quarter due to the blackout period associated with its board meeting (to increase the authorization and increase the dividend); I expect it will be back in the market in a big way given the share-price decline (the stock is off 31% year to date).

Because I sold some shares ahead of the quarter, I now have room to buy back some shares at lower levels. This purchase will bring my total to position in Deere to 1,400 shares, or 2.81% of the portfolio.

Regards,

Jim Cramer

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DISCLOSURE: At the time of publication, Cramer was long Deere.

Send email to james.cramer@thestreet.com.