Caterpillar (CAT)

(Top Pick Oct 30’13, Up 22.60%) They came out with disastrous earnings about a year ago and gapped down. After gapping down, stocks usually get filled back in again.

(Market Call Minute.) He is just not bullish on mining right now, which is a big part of their business.

Very much tied to the global economy. Stock has not done that well. There has been a slowdown in mining which is not good for this company. Some of the regions were over inventoried, so they were not selling. A high quality name. Still a little too early to Buy. If gold does eventually pick up, this company will do fine.

We may start to see a pickup with the general economy, but doesn’t think you will see the moves in this like we saw going back several years, when China was busy building roads and highways, etc. Not sure this will move as quickly as it might have, during the development of China. Not expensive, but doesn’t show up in his radar to own.

Last year they took a 15% hit in revenues, and this year, revenues are only expected to climb 1%. Yet the stock is up 25% in the last 6 months or so. If you own, consider lightening up. He doesn’t care for this one because it is quite sensitive to commodity prices and what is going on in China.

Deere (DE-N) or Caterpillar (CAT-N) for at least a 5 year hold? His instincts are saying Deere because it is in the food area. This one depends more on a worldwide pickup in construction, so it might be a slightly better pick at this point, but long-term he would stick with Deere.

Has been sideways on a 5 year chart. He would prefer names in the consumer space.

Basically 2 big drivers for them. 1) Construction, which hasn’t picked up until recently and 2) mining which has been experiencing a boom for the last 5-10 years and is slowing down right now. These 2 forces are offsetting somewhat so this is looking to be a transitional year. In the short term he would stay out but over time you will see construction in the US really pick up.

An industrial company whose period of seasonal strength is from the end of October right through until May of each year. Chart shows that it has had a nice little break out after a long base pattern followed by a pullback and then it took off. We currently have an upward trend, outperforming the market and it is also trading above its 20 day moving average.

This is on her Watch List as it is a very well run company and they are global. Had issues last year because China was really slowing and they had too much inventory in their system. Would wait a bit to see if China is actually starting to pick up.

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.