Thursday, April 30, 2009

Caterpillar Stocks Get Bounce

Caterpillar closed up $1.87 today at approximately $35 plus a share but still down $50 a share from their 52 week high of $85 plus. Anyone owning just 1000 shares at $85 would still have seen their net worth drop by $50,000.00 in less than 365 days.

At the same time Caterpillar announced higher than expected excavator sales in China attributed to China's stimulus plan which puts more money into infrastructure as opposed to Obama's plan to put more money into government and social programs. CEO Jim Owens announced concern over the protectionism attitude building in this administration and the Democrat congress. Much of the concern is the "buy American" in the stimulus package and is definitely a export trade stopper already showing up in high tariffs imposed on U.S. goods entering Mexico. Mexico's move was to offset our unions move to stop Mexican truck drivers operating in the U.S.

Caterpillar does about 65% overseas, higher than I thought if the report I'm reading is correct with less than 10% of this business in Asia. I'm guessing but I believe "overseas" includes Canada and Central America.


Barry said...

If anyone bought CAT at 85 and didn't use an 8-10% stop-loss that buy would be a disaster right now. But on the flipside, if you bought CAT 20 years ago with a $3K investment it would be worth near $20K today given splits and dividends. At last summers high of 85 the investment value would have been closer to $50K. CAT is a great value at todays prices if you plan on holding for 10 years or longer. I wish I was 25 again. I'd buy a 100 share lot and hold on to it until I was 70 years old (but still using stop-loss).

mazr said...

If I was 70, I wouldn't be relying on any one stock or stocks in general for my well being.

Phil said...

Stocks have better returns than any other investments over time. But why would anyone rely on any one stock if they were in their 70's? If a person educated themselves by their 30's they would know about diversification which would definitely include stocks, 401K if available, bonds, perhaps some mutual funds, cash, etc. But the the key to a good retirement is saving a little from each and everyone of your pay checks.

One stock I've owned since 1978, Conagra Foods has been a great performer to where I don't have to worry today. And that is with this recent market decline.