Construction and mining equipment giant Caterpillar cut its 2015 earnings forecast on Tuesday, due to lower capital expenditures by commodity producers. However, one analyst said there is still a good trade on mining stocks.
In this environment of economic uncertainty, Tim Seymour, a managing partner at Triogem Asset Management, told CNBC’s “Squawk on the Street”that he would be thinking about buying stocks like Teck Resourcesor “fading” the stock of Deere.
Fading is an investment strategy which involves trading against the stock’s prevailing movement, such as buying when the price is falling and selling when the stock is rising.
“Structurally, if you look out over the next five to 10 years, we may be in a different place,” Seymour said. “In the short term ... I think there’s still a very good trade on the miners.”
With storm clouds hanging over the global economy, Seymour still sees value in the sector. “I think the plays on the miners that have been really beaten up if you look at the global growth story are the ones you want to pay attention to,” he said.
Both China and Brazil have announced infrastructure projects. Yet there is currently an inventory overhang in China and Latin America that the regions will have to work through, Seymour said.
Despite the earnings cut, Caterpillar is still forecasting modest gains in construction activity in emerging markets amid an “anemic” economy, Chairman and Chief Executive Office Douglas Oberhelman said on Thursday.
“The bottom line here is they’re saying the world is moderately better — that we’re going to see somewhat tempered but real global growth,” Seymour said. (Read More: Caterpillar’s Warning—What It Means for Global Growth.)
—By CNBC.com's Katie Little; Follow Her on Twitter @katie_little
Additional News: Chinese Growth Set Slowdown Decade: Barclays
Additional Views: Caterpillar’s Pares Bullish 2015 View
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Disclosures:
Disclosure information was not available for Tim Seymour.
