Caterpillar (CAT)

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.

An industrial name that should do well but the huge urbanization infrastructure story that was so big in China is still happening but not as quickly. This has really been a China play in a lot of ways. Stock hasn’t done much. If you own, consider moving into something else in that space.

(A Top Pick March 14/12. Down 18.66%.) Wasn’t certain in the middle of 2012 that global expansion was going to be as strong as it was. There were indications that their order book was starting to drop.

China’s economy has been slowing over the last couple of years and, in fact it bottomed last summer. Now it is coming back but the issue is, how quickly. His take is that it will be in the 7.5 %-8% range so the growth rate for this company will be slower. Has exposure to the housing market in the US as well, which is doing very well. Good name to own but be careful picking your entry point.

(Market Call Minute.) Thinks we are starting to see a slowdown. There is not a lot of sign of capital spending on equipment. (Classes it as a Weak Hold.)

(Market Call Minute) Tied into commodities and US economic recovery. Had a good run and could pull back longer term.