Posted on 01/17/2015 7:05:54 AM PST by thackney
Caterpillar Inc. shares tumbled Monday as the company became the latest victim of the sliding price of oil.
Caterpillars stock CAT, -0.55% tumbled almost 6% after J.P. Morgan downgraded it to underweight from neutral on concerns about the companys direct exposure to oil and gas, and indirect exposure to mining, U.S. construction and emerging markets.
The maker of diggers and dozers direct exposure to the sector is equal to about $6.5 billion, or 12% of revenue, while its indirect exposure may be as much as 15% of revenues, analysts wrote in a note. That means almost 30% of its total revenue is facing pressure in 2015 and 2016.
Crude futures fell below $50 a barrel on Monday in the latest stage of the rout sparked by a glut of supply. See also: Here are the reasons oil is plunging toward $50.
Caterpillar supplies turbines to offshore rigs, as well as reciprocating engines and transmissions for on-site drilling. It also provides construction equipment that is used in infrastructure development, along with aftermarket and other services.
(Excerpt) Read more at marketwatch.com ...
No, I was referring to the headline.
Sorry, no offence intended.
I’m doubtful about the oil bust prompting a boom in other sectors of the economy.
But we’ll see.
I read a financial report last week that said for every job in the oil field, 2.8 jobs in other industries are created. CAT is one but there is a huge impact in other industries such as safety equipment, tires, heavy work clothing, steel for pipe and equipment, automobile and trucks, aviation and the list goes on and on.
Mr. Up/Down is a moron.
I’m not saying an oil bust will prompt other sectors to boom. I am saying that in order to minimize the effects of an oil bust other sectors of our economy must already be booming. It should be noted that with this administration many sectors “booming” is not in the cards. These people placed in charge have consciously done all they can to harm the United States whether politically, economically, culturally or socially.
It’s not an either or world. You can be happy to pay less at the pump AND hope that CAT finds a way to navigate this time without laying people off and feel bad for folks if they don’t. And feeling bad for folks negatively effected doesn’t mean insisting the price go back. I’ve helped put companies competing with my own out of business, I feel bad for the folks losing their jobs but I’m a-ok with winning.
I don’t see the drop in oil prices creating a great growth in the government side from this. Some sectors will grow as others shrink. In some locations one will be significantly larger than the other. Other areas will be reversed.
My point is, just in the past during drops in gasoline price, an overall economic boom is unlikely.
More often, the price drop is a symptom of falling demand from economies already shrinking. That is only a partial cause this time. North American supply also helped drive prices down.
But the drop in the industry will impact the country. We are the third largest oil producer because it is a large part of our economy.
That’s why we diversify. I have invested a significant portion of my money into oil stocks knowing that the price of oil fluctuates. This has happened before.
Thanks for the additional insight! FRegards
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