CAT - $32.67

Caterpillar (CAT) announced some dismal looking outlook today for their company and the economy. As a company last year they did well however they took it on the chin in the 4th quarter. As a result they are anticipating a 25% reduction in revenues for next year.

In going through their annual report, much of their sales increases for machinery happened in the Asian and South American markets, alot due to higher commodity prices. The outlook for 2009 commodity prices is extremely bearish for the year with some hopeful recovery by the end of '09. They've forcasted oil to be trading in the $40 per barrel range and coal to be trading at depressed prices.

A couple of things that did stand out to me was that they felt alot of the mining and metals industry desperately needed to upgrade their equipment and that the out of date infrastructure could contribute to supply problems again when demand comes back. Also, they see some potential with the upcoming stimulus packages by various governments focusing on infrastructure projects.

I think CAT at this price is interesting. It got hammered today because of the 4th quarter results and their bleak outlook for 2009. Now that that initial knee jerk reaction is in and the bad news is being baked in, the stock could see a good pop down the road if things improve quicker than anticipated. Also, as a longer term hold this looks very attractive with higher commodity prices a certainty in the future.