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Subject:  Re: Caterpillar selling for under $83 Date:  10/11/2012  2:18 PM
Author:  pauleckler Number:  46615 of 46922

Hi Rich,

The third one in the mix is Cummins Engine (CMI). If you plot the three for today, CMI is worst off, taking an 8% hit at the moment; DE is doing best, dn 1.5%; CAT is in the middle, dn 4%.

These are kind of bobsey twins. They tend to move together. Yet they serve different markets, and you would think their earnings would reflect that.

Deere is probably benefiting from a WSJ story today saying that soybean production in South America will set records this year and make up for losses in the US due to drought. As seasons are reversed there, they are starting to plant now and will harvest late winter/early Spring.

Strong prices should be good for Deere next year, but in the drought areas financing will be stretched and equipment purchases are easily deferred for a year. Planting has to be top priority.

But I must admit I don't know how well Deere does in South America. Are they the leader there? Or is there major competition?

I still think Cat is a great investment when people talk about water shortages. Dams, canals, pipelines all have to be good business for CAT.

Cummins is more of a diesel engine manufacturer with trucks being their main customer. I know they had a run a few years ago when new diesel regs were coming and trucking companies decided to replace old equipment. But slow economy must be causing slower truck sales, I would think.
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