Monday, May 17, 2010

"...Caterpillar Growth Threatened by Stronger Dollar" (CAT)

The stock is trading down $1.37 at $63.51. That works out to 11 of the 44 points the DJIA is currently down.
From Alacra Pulse via Research Recap:
Caterpillar Inc. (CAT) reported strong earnings last month and analysts had expected its stock to benefit further from more growth in Asia and Latin America. But Audit Integrity last week listed the largest maker of construction equipment on its list of ten companies that failed its “due diligence test,” and it looks like CAT could be hit by a strengthening dollar.

Audit Integrity’s list comprises companies whose valuations are based on a degree of investor trust that may not be justified. Business Insider’s Joe Weisenthal also told investors to watch out for Caterpillar’s future stock trend, as U.S. exporters could be getting hit amid the strengthening of the dollar, the falling Euro and China’s unwillingness to revalue the Yuan upwards. Especially because Caterpillar’s sales growth is concentrated in markets outside of the U.S.

MarketWatch’s Shawn Langlois also highlighted that Caterpillar was among the hardest hit blue chip stocks duringthe recent market selloff. ”Now that the dollar has strengthened, the Euros Caterpillar earns overseas are worth less when they are brought home.”

Next month, the company will see its CFO, David Burritt, and four top managers leave the firm. But analysts don’t seem to be too worried about the management shake-up just yet, and Douglas Oberhelman, who takes over for James Owens as CEO in July and as chairman later this year, says he wants to make the company leaner and more responsive, accoding to Bloomberg.

Owens, who retires this summer, was able to lead Caterpillar through the financial crisis where the firm’s global sales fell almost 40 percent in 2008. He was also a key reason why Caterpillar’s sales more than doubled from $23 billion in 2003 to $51 billion in 2008 and earnings more than tripled from $1.56 a share to $5.66 a share in 2008....MORE