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Caterpillar (CAT) makes and sells all those big yellow trucks and heavy equipment that we’d all love to drive–at least once. They sell to users in construction (54%), mining (22%), and various other industries including quarrying, paving, forestry, etc. They also sell diesel engines, natural gas engines, and gas turbines. They also remanufacture engines–both their own and others’. Finally, they do a whole lot more that you may want to check out at their web site.
To quote them, though, “Caterpillar has grown to be the world’s largest maker of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines.” When you picture those giant machines Peabody uses in strip mining coal, there’s a good chance you’re thinking of a “Cat.” Ditto for when you imagine the scenes you’ve seen of Suncor mining tar sands up in Canada.
And that probably accounts in part for today’s stock price $33.18. At the moment CAT has a PE of 5.8 and an indicated yield of 5%.
On the plus side, I feel very good about the long-term outlook for mining. Given our upcoming push (it is coming, right?) on the infrastructure front, I think the outlook for CAT overall is good. Like GE though, CAT has significant earnings from a finance products division. Can anyone help me out with the outlook for that?
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construction machinery CAT, Caterpillar, financial services, industrial goods
The Home Depot (HD) is the largest home improvement specialty retailer in the world. That’s the good news–and the bad news. On the positive side, they are the gorilla in the home improvement world room, with well over 2,200 locations throughout the U.S., Canada, China, and Mexico.
On the negative side, well… I’m not sure how to put this. I really can’t say much about Mexico, and I actually like the longer-term outlook for both Canada and China, but I am much less confident about the U.S. Sure, the Fed Chairman and the tax-cheat at treasury continue to assure us, but it just feels to me like they’ve got a tiger by the tail and don’t know how to let go without being eaten alive.
Then Warren Buffett tells us not to bet against the U.S. I know he’s a genius, or at least the investing equivalent, and I don’t question his integrity. Still, nothing like this has happened in his investing lifetime, and I’m not sure that even he understands what the results of this crash and bailout will be when when all is said and done.
So today, trading at $21.68, and with a dividend of 3.9%, I think Home Depot is probably the most appealing buy in the home improvement area. I just can’t see my way clear to invest now in a stock so dependent on credit, home prices, and the overall U.S. economy.
consumer goods consumer goods, economy, HD, Home Depot, home improvement
