Caterpillar Q2 2012 Earnings Breakdown!

So I was able to put in a little work last weekend.  I listened to CAT and Westport's conference call.  Both calls were very positive.  I want to focus on Caterpillar's numbers tonight.  LOL!  Only because I wrote down the key stats of the call. Westport will come later.  Apple and Weatherford are still in the Que.  I can happily say all of these stocks are up quite substantially since the last time I wrote!

I know a lot of you are looking for a Westport (WPRT) update.  The progress towards natural gas infrastructure and the adoption of this phenomenal technology is gaining tremendous momentum!  If that isn't enough of a sneak peak, then all I can say is there was a reason for the +12.86% pop last Friday 08/03.  Westport has a great future!  I can say that my largest stake in all of my brokerage accounts is in Westport Innovations.  I'm putting my money where my mouth is!

Now let's move onto the Peoria Power House!  Better known as Caterpillar! (CAT)  Another great performance.  I wouldn't expect nothing less than greatness!

Let the list begin

-Had record quarterly profits. The highest profit in it's 87 year history
-yoy $2.54 eps vs. $1.52 (earnings per share) That's a 67.10% increase vs last year!
-Sales and Revenue came in at $17.374 billion vs. $14.230 billion (a 22.0% increase vs 2011)
-Full year outlook increased from $9.50 a share to $9.60 on roughly 68-70 billion in revenue
-Inventories decreased in China, as equipment has been allocated to other areas of the world
-Backlog of equipment is still at a solid $28.2 billion (An increase of 11% vs last year)
-Gas compression business is doing quite well
-Some mining equipment have lead times into 2014
-A 31% organic growth in mining

This is a small list that I derived from the call, but this is only the start.  From what I heard Caterpillar's management is confident in their earnings outlook through 2012.  They did provide caution in China and slow growth in United States and other areas of the world for 2012, but did mention they see a brighter future in 2013.  That being said we are investing for the future earnings!  With the continued monetary easing in China and other areas of the world CAT believes this will help improve the global economy, which should spark growth in the next 12-24 months.  With the current commodity prices many companies still continue to have an appetite for CAT's equipment.  The backlog is impressive and should be a positive indicator as to the strength of this company.

In my personal opinion CAT has more than came through this quarter.  Even with the economic headwinds this company was able to generate record profits.  The management is excellent and they know how to execute to create strong results.  Although caution was given the stock has been destroyed.  At $87.22 a share the stock is trading at a P/E of 9.75 vs the S&P 500 P/E of 14.6.  This is substantially lower.  CAT should easily be trading at the same P/E level as the S&P 500.  Put that into the equation and this stock would be trading at $130.00 a share.  Last earnings call I mentioned Caterpillar should be trading at $130.00 a share by year end and I believe it still has a chance.  If anything it should break through its 52 week high of $116.95 by year end.  A 35% price appreciation in the next 5 months is definitely not out of the question. 

In the end CAT is a steal at $87 a share and should be bought at these price levels.  Once it blows through $92 a share the momentum will carrier this solid company past the $100 mark and onto its 52 week high!  Plus the stock currently pays a dividend that provides a 2.40% yield

Currently I have a nice position in Caterpillar and plan on purchasing more in the near future.  I have confidence and so should you!

Have a great night!

Clay-

Current Holdings:
Cosi Inc. (COSI)-Monster Portfolio
Caterpillar (CAT)
Westport Innovations (WPRT) Monster Portfolio
Kinder Morgan Energy Partners (KMP)

I'm not a licensed financial advisor. All recommendations is strictly my personal opinion and the information is intended for learning purposes only. Invest at your own risk!

Caterpillar 2012 Q1 Results

Caterpillar (CAT) had yet another record breaking quarter! That's right a record breaking quarter!  So what gives with the stock price?  I have yet to understand some of the price action of late, but the Peoria Powerhouse isn't one to shy away from.  I can tell you from the conference call that business is good. Real good!  The only thing that could have be taken as a negative is a slow down in China, but yet increased activity in the US should offset the current weakness. 

I know that China is always seen as a growth engine for business and that investors panic when they see the slightest bit of negative news coming out of China.  However, in Caterpillar's case there is no need to fret.  China is a very small portion of CAT sales.  Only 3%  Yes maybe later down the road China will be a huge growth driver for CAT, but as of right now I wouldn't put to much thought into the slow down in China.  Management has already put plans in place to reduce the glut of inventory in China to shift/export to other markets that are on allocation.   The US market performed very well and the oil and gas business is on fire!  On top of that CAT raised its 2012 profit outlook. 

Q1 2012 vs Q1 2011

EPS was $2.37 vs. $1.84 a 28.80% increase

Sales were $15.981 billion vs. $12.949 billion Another 23.41% improvement

Profit was $1.586 billion vs. $1.225 billion

Other positives of note was an increased backlog of Caterpillar products bringing the total from $29.8 billion to $30.7 billion, global mining business is strong in China, operating margins were solid, backlog in mining equipment, and a 73% increase in the resource industry.  That means mining!  Mining is huge for CAT at the moment and I don't see any slowdown any time soon.

From the numbers and conservative outlook I still believe CAT will be trading north of $130 a share by the end of the year.   CAT is still a solid buy in my book.


P.S.  I also listened to Weatherford's (WFT) conference call over the weekend and they are still good to go. They started off to a slow start, but business should pick up during the second half of the year.

Have a great night!

Clay-


Full Disclosure

Current Holdings:
Cosi Inc. (COSI)-Monster Portfolio
Caterpillar (CAT)
Westport Innovations (WPRT) Monster Portfolio
Kinder Morgan Energy Partners (KMP)

I'm not a licensed financial advisor. All recommendations is strictly my personal opinion and the information is intended for learning purposes only. Invest at your own risk!

Lookin Good Stock Market!

Everything has been lining up perfectly.  The stock market is firing on all cylinders.  Next stop weekly jobless claims which should be released tomorrow as well as the (PPI) Producer Price Index.  I believe the numbers will continue to be good with jobless claims falling 2 straight weeks.  It will be a huge positive if we can get 3 in a row. 

The stock market has been reacting very positive lately as investors are becoming more optimistic.  That's what I like to see!  Anyways that's the big market moving news for tomorrow.  In the meantime continue to look for new investments.  One area that has caught my attention is Energy.  I personally would look to invest in an oil service company at the moment.  The Energy sector has been crushed beyond belief and with crude oil inventories dropping for the past couple of weeks and the heating season is right around the corner everyone will need to put gas in their cars and heat their home. Personally I believe more gas is consumed in the winter because many people start their car in the morning and let sit idle to warm up.  Just a thought!

My favorite oil service company is still Weatherford International (WFT), but I also like Schlumberger (SLB) the largest of the bunch.  Other great names that I see have been moving up rather nicely is the Peoria Powerhouse!  AKA Caterpillar (CAT).  Just today it closed at $72.13 just $0.70 off its 52 week high of $72.83.  CAT is no joke!  They are here to stay.  There will be many more great quarters for the Peoria Powerhouse.  Also, on my favorite list is the all powerful Apple (AAPL). Just the other day Jim Cramer raised his price target to $325 a share.  That means this stock could run another $50 a share.  Don't be put off by the high stock price of $270.22.  Just buy the thing!  This a great quality company.  With the iPad spreading like wild fire in China this stock will move much higher. This companies growth story is truly amazing!  If I had to buy only one stock right now this would be my absolute pick.

Well that's it for me!  Enjoy the rest of your week.  I will be back on Sunday.  I posted early because I will be attending a great Jason Mraz concert tomorrow.  If you missed Sunday's blog from the 11th please fill out the questions at the end.  Your responses are greatly appreciated!

Happy Trading!

Clay-