what you wanted to know about cyclic stocks but were afraid to ask

[Southie]

Re: what you wanted to know about cyclic stocks but were afraid to ask

@Southie

One cyclical stock that “left the station in a hurry” after the 07-09 collapse is Caterpillar - CAT. I think it shot ho from 25 to ~ 110 from 09 to abt earlt 2013. ( these numbers are just off top of my head. But u get the picture).

Of late, the mining companies have been cutting back on CAPEX. Also they have been using up inventory. Result? Sales for CAT are on a downward trajectory. And expel Ted to remain so for 6 more months.

Remember what we learner abt cyclical stocks? Buy when sh1t hits the fan. Or when e disappears or is negative. But do analyze balance sheet strength. We have gone over how to do that in previous threads. And no, NAV in and of itself tells you nothing about balance sheet. Debt/NAV OTHERWISE KNOWN as debt /equity is an indicator of balance sheet strength.

CAT is at 88 I think. Nit touching it till it plunges to 60. Meanehike look out for an analysis of its balance sheet in these the forum threads.

Arrigoto!

@Southie

Just as the above report was filed, CAT announced share buybacks worth I think 1 billion dollars. This is on top of the same amount it spent buying buck shares in last 12 months. Investors probably rewarded it today.

But buying back shares in the 110-88 $ range? Tauba hai!

Thanks, Southie.

These posts drive home the dangers (and opportunities) in cyclical stocks. Your thesis (which is really not your thesis, this is widely known) has been validated.

CAT closed at 66 this week. Only 10 pct higher than the 60 you asked for 2 years and 2 months ago.

So, are you buying?