I must confess I said CAT was not a buy back in the fall when the stock was sub $60. My rationale was not to get involved in any company that will clearly suffer as the economy weakens. Well guess what the economy didn't weaken that much. I made a bad call, and expressed a total reversal of opinion in January. The stock has since shot up, although not based on me pounding the table on this stock. Today's $7.5 billion buyback is HUGE. It's more than 15% of total market cap and it signals to me that they think there won't be any hard landings, and in fact maybe there won't be a landing at all. Now, I personally think the stock has had a fantastic run and may see some cooling off in the near term. Longer term this thing is going higher. It's a DOW dog and we know what a great track record the dogs of the Dow have had. The only -ve I see is the paltry 1.8% dividend yield. But who cares about that when the stock will gain an easy 25% or more in the coming year. Just watch out if interest rates start to head north. After todays testimony by Bernanke, looks like that might be a while off, so I think you can still back up the truck on this one, but be prepared to dump it when and if rates head higher in the summer time. In the meantime I think it is a purrfect stock to include in anyone's portfolio.
No comments:
Post a Comment