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Tickers in this Article: DE, WMT, HNZ, BKS, SBUX, CAT, JNJ
I recently wrote an article about the value of strong franchise type businesses in which I made reference to agriculture equipment manufacturer Deere (NYSE:DE) as having a dominant franchise. And based on the recent earnings release, investors should be able to have a better understanding of why this is the case.

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Look at the Big Picture
In what many will easily describe as the worst economic environment since the Great Depression, Deere ended the year having earned $873 million. The reported fourth-quarter loss of $233 million was a result of a $322 after tax charge, a number that obviously shouldn't be ignored but at the same time should not cloud what Deere has accomplished so far this year. In addition to the earnings, Deere reduced its inventories by $1 billion, a testament to discipline during this environment. Further, Deere forecasts net profit of $900 million in 2010.

Comparatively Thriving
Deere's results are just another affirmation of a theme I've alluded to recently. As the economy embraces a new normal - characterized by high unemployment and slower growth - the quality names are starting to stand out. On one side you have retailers like Barnes and Noble (NYSE:BKS) and Pacific Sunwear (Nasdaq: PSUN) reporting lower earnings and weaker guidance; on the other side, you get names like Deere, Caterpillar (NYSE:CAT), Johnson & Johnson (NYSE: JNJ), and Heinz (NYSE:HNZ) that are not only surviving during this recession, but thriving relative to the other competition. (For related reading, check out The Impact Of Recession On Businesses.)

Sooner or Later
And sooner or later, money will start finding its way to these stocks. A name like Heinz trades for 15 times earnings while Starbucks (Nasdaq:SBUX) sells for 40 times earnings. I love Starbucks, but going forward I'd prefer to own a company that sells ketchup than $4 lattes. And as an added bonus, the dividend yields on these names are averaging 3-4%. Rallies often tend to initially direct money to smaller more speculative issues. This rally has been no different as many retailers are up by 200% or more while Wal-Mart (NYSE:WMT) is actually down for the year. But an old adage goes, "to finish first, you must first finish."

Bottom Line
As market activity begins to slow, with the onset of the holidays, take the time to examine your portfolio and assess whether you want quality and earnings versus more speculative bets. To me, it's a no brainer based on valuation. (For related reading, check out The 4 Basic Elements Of Stock Value and Dividend Yield For The Downturn.)

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