Less than a week ago I gave you my take on Apple stock and now it's Caterpillar's turn! That's right! The Peoria Powerhouse. Ticker symbol CAT
What I have learned from this phenomenal company is that business is good. Business is so good that 2012 will be another year of growth for this company. Growth is the easiest indicator pointing to higher stock prices in the future. Now lets take a look at CAT's 4th qtr numbers and highlights.
-Record 2011 4th quarter revenues of $17.243 billion vs. 2010 revenues of $12.807 billion.
-Revenue for the 4th quarter was 34.63% higher vs last year. Truly amazing!
-4th quarter profit was $1.547 billion compared to $968 million this time last year
-EPS came in at $2.32, which is 57.82% higher than 2010 EPS of $1.47
Now let's take a look at the full year numbers
CAT's 2011 sales and revenues destroyed the 2010 numbers ($60.138 billion vs. $42.588 billion). That's an increase of 41.20%! On top of that profits for 2011 were 82.5% higher than 2010 coming in at $4.928 billion vs. $2.700 billion and full year EPS was $7.40 vs. $4.15 or a 78.3% increase. I could really stop right here and tell you to buy this stock on the dips, but I have more to add to this wonderful earnings report.
I promise this is the last list for the night. Here are the remaining reasons I believe CAT will have another extraordinary year.
1. Raised full year 2012 sales and revenues to $68 to $72 billion (That's double digit growth)
2. Strong global demand for its products
3. Improved quality of products
4. Increased investment in product development
5. Integrate acquisitions and adding production capacity
6. 2011 produced record sales even with slow construction market in the US and Europe
7. Commodity prices are favorable, which means greater demand for engines and turbines for petroleum applications, as well as mining equipment.
8. Full time employees increased 20,609 from 2010. 125,099 employees vs. 104,490 in 2010. Hiring is always a good sign for business!
9. Higher sales volume
10. I saved the best for last.... Order backlog of $29.8 billion at the end of 2011. That's an all time record for CAT! That means the demand for CAT products is in full force.
In closing I believe CAT has plenty of room to run higher into 2012. I would wait for a pull back say between $105-$110 before I would make an initial purchase. That's a good starting point.
Have a great night!
Clay-
Showing posts with label Earnings Growth. Show all posts
Showing posts with label Earnings Growth. Show all posts
Tuesday, February 7, 2012
Thursday, June 17, 2010
Apple Is Back In Action! Hit The 52 Week High. Will It Go Higher?
Hello Everyone! Today I want to come back to Apple (AAPL) just like I did Weatherford International (WFT). Over the past 6 days Apple has moved higher. Just today Apple touched its 52 week high of $272.90 and closed near the sessions high. What does this mean? It means confidence is rebuilding and buyers are stepping back in the market to own the best merchandise they can buy and Apple is on their list. Now you may be thinking that AAPL is expensive and it has gone up a lot over the past year. You may be afraid to buy the stock and I’m here to tell you not to be. I will explain why you shouldn't think that way.
1. Just today the whole market was down the majority of the day and Apple was up. This is a very good indicator of what fund managers are looking for. Stocks that are up on down days are hinting to everyone that there is buying interest and you should never ignore those stocks. Stocks like this will move up much higher on a positive day.
2. Apple reports earnings about a month from now and usually money managers anticipate the earnings and buy before that date. You should see Apple move higher in the coming weeks because of earnings.
3. Apple went up 6 days in a row! This is a positive sign that money is flowing back into this stock.
4. When the market was being taken down all through the month of May Apple shed about 15% while other company’s continued to go down in value and Apple traded in a sideways pattern not losing value but staying steady. Apple stood its ground and is back above the price it was at before it got knocked down in May.
5. Apple continues to have great products and the Ipad was and still is a success. We should see more revenue coming in with the new release of the Iphone. The outlook for the Iphone looks promising. Kids prefer Apple over any other device. Of course other products offer many of the same features, but in the end kids choose Apple. I do! Products that kids love tend to sell. I always say the kid wins because they bug their parents until they get what they want. Why do you think Pixar movies do so well? Kids love them and the parents have to come along for the ride. Pixar just made double the profit because the kids win in the end.
6. Apple currently has no debt and has 23.16 Billion dollars of cash on hand.
7. Apple is cheap! Cheap as it only trades a little less than 1.5 times its long term growth rate of 16.07%. A key thing to see is never buy a stock that is trading more than 2 times its growth rate. I promise you that you will lose money. Money mangers that invest in growth companies never invest in companies that trade at 2 times their growth rate. Money managers control the stock market so if they are not willing to pay for the stock then that stock will go down over time. Now lets get to it and crunch the numbers below.
Apple trades at a P/E of 23.05 You can find all these numbers at http://finance.yahoo.com/
P/E = Price/Earnings
Apple is currently at $271.99 a share and has earnings of 11.80
So you take $271.99/11.80 and you get a P/E of 23.05
Now one of the numbers I use to value a stock is the P/E. According to the Analysts next years earnings is said to be at 15.73 eps (Earnings per share)
That means from the current level of 11.80 the earnings is predicted to be over 33% higher.
That means at the current price of $271.99 /15.73 (next yrs earnings)
You would get a P/E of only 17.29 and Apple would be trading a little over 1 times it’s growth rate. Now that’s cheap!
If this is the case Apple would be considered cheaper because the P/E has decreased because the earnings have gone up.
I say if the stock is strong and willing to trade at a P/E of 23.05 it has the potential to trade the same P/E next year. If this were true you would take the earnings=E (15.73) and multiply by the P/E to get the price of the stock if it were to trade at the same P/E of 23.05
E*P/E (15.73*23.05)
You would take 15.73*23.05=$362.57 (Price Target)
In a perfect world the price target of Apple would be $362.57 next year if nothing changed and the earnings were correct of 15.73 and it traded at the same P/E.
Analyst estimates are currently at average of $311.72. I think Apple will be much higher. So if the analysts are right then Apple stock has another $40 or so to move higher or around a 15% gain from today’s current price of $271.99. That right there is a good indicator that this stock has room to run. 15% move up isn’t anything to cry about since your savings account will rake in a little under 1% at these current levels. You won’t get rich this way!
To be conservative I would comfortably put a $325 price target on Apple for next year because I can't predict the future. Hopefully I’m wrong and it’s much higher!
Here are the key points
-Determine a stocks P/E
-Find the long term growth rate (5 yr)
-Determine if the stock is cheap by calculating the price to the long term growth rate and you will get what we call a PEG Ratio
-If it a stock trades at 2 times its growth rate don’t buy!!! Apple is at 1.43
The data supports itself so please if you want to buy some Apple then do so. Make sure to buy in increments. Apple will break through its 52 week high in the near future and move higher as the momentum of cash flowing into this great company continues. Good luck trading!
Thank You,
Clay-
Have a Question? Send Questions to wheatleycsmk@gmail.com
New Content every Thursday and Sunday.
Occasional Stock Market Commentary during the week.
Feedback Welcome!
Interested? Please become a follower
1. Just today the whole market was down the majority of the day and Apple was up. This is a very good indicator of what fund managers are looking for. Stocks that are up on down days are hinting to everyone that there is buying interest and you should never ignore those stocks. Stocks like this will move up much higher on a positive day.
2. Apple reports earnings about a month from now and usually money managers anticipate the earnings and buy before that date. You should see Apple move higher in the coming weeks because of earnings.
3. Apple went up 6 days in a row! This is a positive sign that money is flowing back into this stock.
4. When the market was being taken down all through the month of May Apple shed about 15% while other company’s continued to go down in value and Apple traded in a sideways pattern not losing value but staying steady. Apple stood its ground and is back above the price it was at before it got knocked down in May.
5. Apple continues to have great products and the Ipad was and still is a success. We should see more revenue coming in with the new release of the Iphone. The outlook for the Iphone looks promising. Kids prefer Apple over any other device. Of course other products offer many of the same features, but in the end kids choose Apple. I do! Products that kids love tend to sell. I always say the kid wins because they bug their parents until they get what they want. Why do you think Pixar movies do so well? Kids love them and the parents have to come along for the ride. Pixar just made double the profit because the kids win in the end.
6. Apple currently has no debt and has 23.16 Billion dollars of cash on hand.
7. Apple is cheap! Cheap as it only trades a little less than 1.5 times its long term growth rate of 16.07%. A key thing to see is never buy a stock that is trading more than 2 times its growth rate. I promise you that you will lose money. Money mangers that invest in growth companies never invest in companies that trade at 2 times their growth rate. Money managers control the stock market so if they are not willing to pay for the stock then that stock will go down over time. Now lets get to it and crunch the numbers below.
Apple trades at a P/E of 23.05 You can find all these numbers at http://finance.yahoo.com/
P/E = Price/Earnings
Apple is currently at $271.99 a share and has earnings of 11.80
So you take $271.99/11.80 and you get a P/E of 23.05
Now one of the numbers I use to value a stock is the P/E. According to the Analysts next years earnings is said to be at 15.73 eps (Earnings per share)
That means from the current level of 11.80 the earnings is predicted to be over 33% higher.
That means at the current price of $271.99 /15.73 (next yrs earnings)
You would get a P/E of only 17.29 and Apple would be trading a little over 1 times it’s growth rate. Now that’s cheap!
If this is the case Apple would be considered cheaper because the P/E has decreased because the earnings have gone up.
I say if the stock is strong and willing to trade at a P/E of 23.05 it has the potential to trade the same P/E next year. If this were true you would take the earnings=E (15.73) and multiply by the P/E to get the price of the stock if it were to trade at the same P/E of 23.05
E*P/E (15.73*23.05)
You would take 15.73*23.05=$362.57 (Price Target)
In a perfect world the price target of Apple would be $362.57 next year if nothing changed and the earnings were correct of 15.73 and it traded at the same P/E.
Analyst estimates are currently at average of $311.72. I think Apple will be much higher. So if the analysts are right then Apple stock has another $40 or so to move higher or around a 15% gain from today’s current price of $271.99. That right there is a good indicator that this stock has room to run. 15% move up isn’t anything to cry about since your savings account will rake in a little under 1% at these current levels. You won’t get rich this way!
To be conservative I would comfortably put a $325 price target on Apple for next year because I can't predict the future. Hopefully I’m wrong and it’s much higher!
Here are the key points
-Determine a stocks P/E
-Find the long term growth rate (5 yr)
-Determine if the stock is cheap by calculating the price to the long term growth rate and you will get what we call a PEG Ratio
-If it a stock trades at 2 times its growth rate don’t buy!!! Apple is at 1.43
The data supports itself so please if you want to buy some Apple then do so. Make sure to buy in increments. Apple will break through its 52 week high in the near future and move higher as the momentum of cash flowing into this great company continues. Good luck trading!
Thank You,
Clay-
Have a Question? Send Questions to wheatleycsmk@gmail.com
New Content every Thursday and Sunday.
Occasional Stock Market Commentary during the week.
Feedback Welcome!
Interested? Please become a follower
Subscribe to:
Posts (Atom)