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Valuing a cyclical stock such as Deere (DE)—which reports fourth quarter fiscal 2010 earnings on Wednesday, November 24–is always difficult. You have to figure out where the company is in the revenue cycle from peak to trough and back again. And you have to figure out how long the cycle will last.

In Deere’s case, the Wall Street projection is that the company is about to hit the top of the cycle. Earnings growth, according to Wall Street, will hit an astonishing 311% in the fiscal year that ended in October 2010 and then head downward, as the cycle peaks to 35% in the quarter that ends in January 2011 on its way to just 16% growth for the fiscal year that ends in October 2011.

That projected peak seems early to me, considering that the company’s business really only bottomed in late 2008 through late 2009, and considering that farm prices seem to be headed higher, not lower, for the foreseeable future. According to the Association of Equipment Manufacturers, sales of four-wheel drive tractors were up 83% in October 2010 from October 2009 and sales of large row-crop tractors climbed by 54%.

That sounds like acceleration rather than a peak to me. And if that’s the case, if Deere is only in year two of a business recovery cycle, as Standard & Poor’s suspects, then this stock will report a positive earnings surprise on Wednesday when the company announces fourth quarter fiscal 2010 earnings. And that surprise is likely to be just the first of a string of three or four.

Standard & Poor’s estimates calendar-year earnings at $5.12 for 2011. That puts the stock at 14.9 projected calendar year earnings at the open on November 23 when shares traded for $76.22. That makes the stock undervalued, in S&P’s opinion, since normally Deere trades for at least 16 times earnings at this point in its recovery cycle. That gives S&P a 12-month target price for Deere of $82 a share.

If with me, you think Deere is about to deliver a series of earnings surprises, because the cycle is stronger than currently expected, then that $5.12 is low. Last quarter Deere delivered a 15% earnings surprise. If the company matches that for the next calendar year, then earnings for calendar 2011 add up to $5.89 a share and the 16 times target price comes to $94 a share.

That’s my logic anyway. Deere is a member of my Jubak Picks 50 portfolio . The shares traded at $75.76 at 3 p.m. New York time on November 23.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund, may or may not now own positions in any stock mentioned in this post. As of the end of the most recent complete quarter on September 30, the fund owned shares of Deere. For a full list of the stocks in the fund as of the end of the most recent quarter see the fund’s portfolio at )