Caterpillar (NYSE:CAT) missed expectations by some 45%. The noise and fury from the financial press is impressive. A blue chip missed. The China play is broken. commodities are so over. So its panic stations or is this the value play entry point.
The stock is close to the 52 week low. So like the market has sold off because none of the points being raised are new news. China has slowed down. Commodities are cooling. The western world is not catching fire.
The stock yields some 2.51% and they are making noises about more stock repurchases. Well if you must go ahead and lower the float, increase EPS and shrink the pie go ahead.
Here is the silver lining in your cloud of doom. Normally dealers buy inventory as they prepare for the busy season. This time the dealers did a 180 and reduced inventories.This will revert itself. The classic squeeze is setting up.
If you follow commodities and understand cycles. Take a long cold sober look and then keep watching. When media gets negative reach for your spread sheet and start crunching the numbers.
Buy low sell high. Buy ugly sell pretty.
George Gutowski writes from a caveat emptor perspective.