This CAT ain't Purring Now, but will Soon

Caterpillar reported q3 results this morning. Earnings of $1.40 per share were a third-quarter record, up 21% from a year ago. Revenues of $11.4 billion were an all-time record. International sales spiked 31.3%. One exec told an analyst on the conference call "Almost everything is up." It seems that high energy and commodity costs, along with the growth of emerging economies, has increased demand for Caterpillar's products worldwide.

But, the stock got spanked as a result of poor sales in the US (down 11% from a year ago). "Many U.S. industries important to our sales are in recession," Caterpillar said in its report. Hardest-hit was housing.

While Caterpillar is exposed to some of the weakest parts of the U.S. economy, poor U.S. results were expected and should have already been priced in to estimates. Sure, the company guided conservatively out into 2008, but that too should have been expected.

While I am not necessarily bullish on emerging markets (in fact, I advise against investing in these markets as you will know that if you read my other articles on this site - hint, hint), I believe that huge amounts of capital are being put into new infrastructure around the world. No matter what happens to the global economy, this is not going to stop, and CAT is going to be a continued beneficiary. So, I am going to take this opportunity to add to my position in CAT. It is very reasonably priced here.