Today I heard one report that said CAT sales were less than 15% in China, and Cramer said all of CAT's growth in the recent past has been due to China. Are both things true? Want to buy, but I can't pull the trigger for fear that in 30 days CAT will be at $70!
Cat's sales within China are only 3% of total revenues. The issue is the aggregate sales to the rest of the world that supports the Chinese manufacturing complex and the infrastructure build out. But make no mistake China is not dead. They'll still grow at 7.5% or better and it's a huge country with 1.5 Billion people. They're not going to stop developing. They have decelerated a bit to try to contain inflation and stabilize their economy. But 20 years from now we'll still be in awe of their growth rate. Caterpillar is a cyclical company. I've watched a dozen of these cycles through the years. If you're a long term investor you'll do well. If this is money you'll need in the next 12-18 months, it's probably not right for you. Some on this board will forecast nothing but doom and gloom. Bernanke bucks being worthless, inflation raging all around us practically the end of civilization as we know it, etc. Blah, blah, blah. Invest in good companies with long term growth opportunities and be patient. Has worked for 100 years, will likely work for another 100. The more things change the more they stay the same.
Well, if the market is truly forward looking, then ask yourself how do you see the world economy doing in the next 6-9 months.
With all you hear about Europe, China, and India don't you think CAT will miss on earnings.
And if that happens the result may be similar to what many are seeing with mreits like AGNC,NLY and the like.
Personally, I would not be too surprised to see this end up trading in the 60's.
Any investment in CAT should be seen as a long term commitment that could take years to recover from.
Of course you have the divy to keep you warm at night, but do remember that rising rates can be a killer for stocks.