Saturday, November 23, 2013

Caterpillar - Infrastucture Crumbles as World Leadership Fumbles

Cat statistics as reported in the WSJ: Machinery sales by it's dealers for three month period ended Oct. 31 were down 12%. Sales of power systems, mainly engines down 9%. Both measures deteriorated from the 3 months ended Sept. 30, when dealer sales of machinery declined 9% and power systems were down 2%.

Cat has been suffering from the drop in orders from the mining industry and sales of machinery such as used in commercial building and road construction.

While our infrastructure crumbles for lack of funds not available as our taxes are being spent to pay the interest on our massive loans from foreign companies and massive amounts being spent to socialize this country by his majesty, our emperor to be. And by his cohorts on both sides of the aisle but mainly by those in power, the Democrats (My comments)

Machinery sales fell 26% in the Asian-Pacific region in the latest 3 months, 14% drop in Europe, Africa and the Middle East, 8% in Latin America and 2% in North America. Power systems sales dropped 27% in the transportation category and 21% in electric power but climbed 16% in industrial. Power systems for the petroleum industry were unchanged from a year earlier.

Neither my wife or I hold Cat stock at the present.We took our profits in the $84 range.  I cannot predict nor can many of the brokerage analysts predict with much accuracy what the future holds for this industrial giant and world leader. I personally believe its stock prices will remain between $81-$85 for the rest of this year. To say this administration and many world leaders are largely responsible for the uncertainty of industrials is to put it mildly.

The impact of supply on demand has seldom been greater.

Surely Cat leadership realizes this is not the time to spend money on a new world headquarters. If and when they do, I do not believe it will be before 2020 nor do I believe it will be in Peoria. If something is built out by the airport, I believe it will be a modifyed version of a typical major world headquarters. What they plan to do with buildings they bought in downtown Peoria remain a mystery to me and perhaps a mystery to most minor holders of Cat stock.

The latest news to me is a possible criminal investigation of a rail parts scam and illegal dumping in the Pacific. Their stock trades in the $82 range and no insider trading has been noted. As I blogged before, Cat is not the $150 stock as some analyst predicted a couple of years ago but since they pay a decent dividend  my wife and I plan to buy again when the stock drops to $80. It may drop lower perhaps on info unknown to the ordinary buyer or brokerage. If so, it will be beyond the control of Caterpillar's superior management team.

Who knows these days as the overall market rise almost daily, Cat and Joy Global stock excluded, in overall value? What is known that stock prices that go too high usually come down. Sometimes very fast as Linn Energy did this year. Ordinary investors like myself need to have time to study and watch the market or have very competent brokers. I'll never forget the broker who advised I sell my RLI at $14. What a large mistake I made in not paying closer attention to the people who advised me to buy more, not sell.

But in those days, I was concentrating on helping guide Peoria County to fiscal sanity, living in Arizona.(Yes, I owned a business in Phoenix and bought a home in Sun Lakes, AZ.) and involving myself in social work.

Poor excuses.

Hope that is not true with Taser and Imax. Give your coal stock to your kids or grand kids because someday companies like Arch coal will have buyers interested in buying an improved product from them.

After the Obama reign is over.

If ever.

1 comment:

Merle Widmer said...

Cat stock "popped" today. Then fell back a little near closing. Analysts on CNBC recommend sell. Also mentioned that many stockholders are calling for a 'change at the top'.