As it turns out, trader Stephen Weiss thinks a long position in CAT is for the dogs. He’s short.
That’s not to say Weiss doesn’t like Caterpillar as a company – he does. “It’s a very well-managed company,” he says.
Rather Weiss simply believes the stock is ahead of itself. Here's why.
Weiss has sifted through the transcripts from CAT’s last earnings call and he thinks some of the metrics the company is using in its forecasts are just way too optimistic.
“CAT’s forecasts are for 3% US GDP – the EU being flat – all of Europe being up 50 bps, China growing at 8.5% and Brazil up 4%,” he reveals.
“I believe every single one of those targets is going to be missed because the economy globally is slowing dramatically,” he says.
“Also their most profitable segment this past quarter was their resource business and that’s also coming down.”
All told he tells us, “I think the estimates come down and come down meaningfully.”
Trader Pete Najarian just shakes his head. He thinks technicals will prevail.
“The stock is just about at the 50-day of $97 and that been a level of strong support. At that level, I don’t know if I’d establish a short position."