Caterpillar (CAT)

On his radar screen. Feels it has been unfairly punished. Would like to buy it at 10-11 times earnings and they are not there yet. There could be things that happen with this company such as spin outs or M&A activity. Generating a lot of free cash flow.

She is on the sidelines with this one at this point. It has been weak. Things are getting worse at their dealership level. In China a lot of the growth going forward won’t be dependent on infrastructure so much.

Took advantage by buying a half position when it dropped to the mid-$70s. Has good exposure on the resource side. If there is some good news out of China, it could pop. From a company’s point of view, they are doing good things with what they have. They sell equipment and parts, but are starting to get into the service side a little where they are monitoring and gathering data on equipment and customers, which allows them to get another revenue stream.

Good, maybe great company but in a really tough space. Had a big miss in earnings. Top line is down significantly on a year-over-year basis. He would be more comfortable with this if it got down into the $75 range. Has a big negative overhang from mining but the bigger problem is that they don’t make these machines overnight so there is a longer lead time and they have a lot of inventory built up in the channel. Have to work through that, then work through new sales. Emerging markets are under pressure for them.

Out of favour. Came out with some nasty earnings a few days ago. Gapped down to about $84 and he has never seen a stock chart where the gap doesn’t get filled in. This should be back up at $88 before too long. Likes industrial companies. Has some support at around $79. If things don’t turn out the way he plans, he’ll be putting a stop loss on at around $70.80-$70.90. 2.9% dividend yield.

Looking at seasonal patterns it has done 5% in November and 3% in December. Longer term there is a serious shift in China from highways and bridges into consumption.

Has a very mixed opinion on this. Doesn’t like to sit on the fence because it is a really great company and really well run. The problem is, they are in an area of the market where there is low or limited demand for their products. Made an acquisition in Bucyrus a couple of years ago on which they overpaid. Wrote most of this down and will probably write the rest of it down. Globally we are seeing that commodities have rolled over and mining demand is lower.

Sold his holdings about 6 months ago in the $85-$86 range. What worried him was when the CEO announced that they were struggling in China. Although China continues to grow, the growth rates are starting to fall, especially in the mining area. He would be careful with this one.

He is very negative on resource stocks right now and this company has 45% exposure to mining. Mining has probably been the hardest hit of any sector in the resource area.

(Market Call Minute.) Revenues were down 17% last quarter. Good company, but not the right time for them.

(Market Call Minute.) Has corrected quite a bit from its highs. Leveraged to construction and mining longer-term.

We are looking at potential of 10% more correction on this one but not much more. It is largely linked to earnings being a bit weak. Mining equipment sales are expected to fall by half this year. He thinks this is already reflected in the stock price. Begin nibbling when it drops 10%.

Came under a lot of pressure because of China. The focus of their current 5 year plan is less on China industrial growth and on the infrastructure but rather from consumer spending side. Concerns are warranted. Prefers TKR-N, but it is very volatile.

Sold off a couple of weeks ago on some guidance related to Asia. Solid company. Trading at about 10X earnings. This is probably a pretty decent entry point. When global economies get a little bit more steam behind them to earn $12-$13 earnings a share, you will have a nice little return.Sold off a couple of weeks ago on some guidance related to Asia. Solid company. Trading at about 10X earnings. This is probably a pretty decent entry point. When global economies get a little bit more steam behind them to earn $12-$13 earnings a share, you will have a nice little return.

(Market call minute.) Hold for now but if it gets down to the high $60s you can buy. Has some competition coming of China and mining activity is slowing down.