There’s been too much hype around Caterpillar versus the expected reality of a muted recovery in construction activity, said Eli Lustgarten, analyst at Longbow Research.
“The U.S. is the biggest near-term upturn because it’s been down for 3 years in a row and all 50 percent this year,” said Lustgarten. “But housing recovery will be slow, non-residential construction is just starting to go down into 2011 and the highway bill has been postponed until March of 2011. So you’ll get a recovery, but it will be muted.”
Lustgarten said he has a neutral rating on the stock .
“China’s market is a very big market but Caterpillar’s a latecomer to it,” he said. “Translation: they’re not going to make much money over the next couple of years.”
Lustgarten said although Caterpillar stocks look good in 2012 to 2015, for the next 3 to 4 years, they are going to have a far more muted recovery than the optimism that the company recently articulated.
Lustgarten does not own any shares of Caterpillar or Deere.
Caterpillar Competes With:
Deere & Co.