Caterpillar (CAT) is down just over 2% today after Stifel Nicolaus cut the tractor maker’s shares to "hold" from "buy", saying margins have begun to level off. Shares are trading around $74 and the Masters see this as a buying opportunity.
Oh how the analysts rule Wall Street, with a downgrade here, an upgrade there, and just like the magic, the stock price obeys it’s command like a cobra being hypnotized by a snake charmer.
Don’t be fooled by this downgrade America, what CAT has going for them is their International revenue and business.
Caterpillar raised it’s outlook for FY 2007 thanks to International sales this last quarter. In Q1 07 International sales totaled $896 million, slightly less than the amount of decline in sales in the US. Revenue rose 36% in Europe and the Middle East, and 22% in the Asia Pacific region.
The company forecasts continued strong 3-5 year demand for truck engines throughout the European-Middle Eastern region. Caterpillar also realized $389 million in sales from Progress Rail, and gained $184 million from favorable currency transactions.
The analysts are wrong this time, CAT is going to keep going strong, thanks to business outside of the United States. Just because the housing and building sector is cooling at home, doesn’t mean Jack, America is not the center of the world. The center of the world is of course Butte, Montana.
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