Kevin Simpson Caterpillar CAT-N BUY Jun 28, 2024

The former CEO was good, but no longer running the company. However, shares are not expensive now, -18% this year. That said, it's not the time to buy this (could fall further).

They report Wednesday. Benefits from Joe Biden's infrastructure bill and has plenty of projects to build ahead.

He bought more CAT. It's a stealthy play in the data centre space where CAT does the heavy construction. This trades at only 17x PE, a 25% discount to John Deere, historically wide. Pays a 2% dividend and has lots of free cash flow.

Owns it for the data centre build, which is seeing huge demand.

It reports Tuesday. He expects a good quarter as CAT rides the wave of infrastructure spending and re-shoring.

Upgraded today. Is fairly valued. The quarter was good, but not exciting. Is a core position of his. The risk is if Russia and Ukraine end the war, this could lower commodity prices, but he doesn't expect this anytime soon.

Have a strong backlog. Wants to see margins improvement. It's had a huge run, but can keep going to finish the year strongly.

Projected 18% earnings growth in 2026, yet trades at only 22x PE 2026.

Sold as too pricey when it got to 27x forward PE for 6-7% growth. Because it's so cyclical, it moves around and this will give him another chance to buy.

If you think there's going to be a mining cycle, it's a given that this name will sell a lot of equipment. 

People are underestimating its big turbine business -- natural gas turbine generators that are smaller than utility-grade generators. This part of the business feeds right into the data centre buildout. Can be used for alternate, backup sources of power. Only 5% of revenue right now, but could grow 10-25% a year over next few years with strong pricing. Yield is 1.12%.