First things first – Caterpillar (CAT) is a great company. While it operates in deeply cyclical markets and has had to withstand incoming competitive entrants from China, CAT has an almost-impossible-to-beat global distribution network and incredible brand value, not to mention leading share in a large portion of the markets where it chooses to compete and excellent margins relative to most of its competitors.
The issue I have today is a combination of valuation and Street expectation. I believe non-residential construction is likely to weaken in North America and Western Europe in 2021, and that weakness could persist into/through 2022, and I’m likewise not so bullish on near-term demand in the mining or energy sectors. With Caterpillar already trading ahead of sector trough multiples, and recent data not exactly supporting a robust near-term recovery, I’d prefer to wait for a better opportunity.
Follow this link to the full article:
The Street Seems Ahead Of The Curve On Caterpillar's Recovery
No comments:
Post a Comment