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Caterpillar Inc. Message Board

  • banmate7 banmate7 Sep 18, 2013 2:04 PM Flag

    Might Be Time to Accumulate More CAT?

    I already put in $5k at $86.92. I am thinking of another $5k - $10k purchase. Why? Because I sense value in a blue chip with a serious business moat.

    The PE is 13. Historically, it is typically higher. An eyeball glance at PEs since 2003 indicates 16 - 18 most of the time. Obviously I am disregarding the impact of the 2008 crash. The PB = 3.2 and PS = .89. Not bad.

    The debt is not insignificant at $40 billion, with net free cash flow of operating activities at $5.2 billion. This seems concerning. However, I read that most of this debt is tied to CAT financing the sale of its goods & services to customers. It's hard to compute a probability of delinquency here. However, given CAT's business moat & fundamentals, I am inclined to think it isn't high.

    CAT is the best in class for getting things out of the earth. Consider also that our crust & mantle contain many commodities to keep going for, from what I've read, thousands of years. If anybody is going to continually innovate energy efficient ways to get at this, it should be CAT.

    I also think that China & India, among other societies, will simply keep developing. They have a long way to go. There might be lows, but linearly they will trend higher in using CAT goods & services across time. It's a historical inevitability.

    Lastly, Bill Gates went in big on CAT. This is compelling, given his association with Buffett. Again, this is another value signal for me. I'm just thinking I might get in at an even better price. I still don't know if I should hold out for a short term opportunity...or go relatively soon in again at what seems to be a cheap price.

    Any thoughts here? Thanks in advance.

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