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Caterpillar (NYSE: CAT) reported last week that its February machine retail sales were down 13 percent. The reports stated that February North America machine retail sales were down 12 percent, while Asia/Pacific machine retail sales were down a whopping 26 percent, and Latin America retail sales down 3 percent. Despite the slowdown the company is expected to unveil its latest innovative engine for hydraulic fracturing at the 13th China International Petroleum& Petrochemical Technology and Equipment Exhibition (CIPPE). February's machine sales are a bit worrying considering the global economy is supposed to be doing well with the equity indexes at all-time highs. It appears that emerging market sales are not as strong as previously expected, with worldwide sales being negative since Q4 2012. This was the first negative sales drop since 2010.

FedEx (NYSE: FDX) cut its outlook for the year last week stating that it will trim its flight capacity to Asia as customers are shifting to cheaper and slower shipping services. The company reported a profit drop of 31 percent, shocking investors who are convinced of a strong global recovery. The company is expected to try to cut costs by eliminating older cargo planes, attempting to lower costs by $1.7 billion a year for three years. Despite the company reporting strong revenues of $11 billion, up 4 percent from a year ago, expenses are looking to be cut, in particular lower international services. Cutting Asia international services is concerning, and it appears that the impact was much worse than analysts expected. Net income was $361 million (or $1.13 a share), compared to $521million (or $1.65 a share).

Both Caterpillar and FedEx create some doubt that the global economy is as strong as some have been saying. Both of the companies are considered bellwethers of global activity and are great indicators of future strength. But these reports have put a large hole in the bull market theory that the markets will keep on appreciating. One sector that has not shown a slowdown at all is the semiconductor niche. Most companies in this area have performed well, and finding mid-cap names such as Volterra Semiconductor (NASDAQ: VLTR) can be a very profitable investment. VLTR has a market cap of $355.58 million and provides high performance analog and mixed signal power management semiconductors for computing and network markets. The company's core products are integrated voltage regulator semiconductors and scalable voltage semiconductor chipsets.

The stock has been hit very hard over the last six months, dropping from $22 per share to a measly 52-week low of $14.15 earlier this week. On March 5, the decline in the stock was accelerated as Needham lowered its price target from $24 to $21 a share. Needham expects that 2013 will be a transition year for the company as it shifts to new secular growth areas. The firm also lowered its notebook revenue estimates for the company, but at the same time put a buy rating on the stock based on valuation. Weird but true. With the stock trading just above $14 a share, the company is a great buy. The stock is way oversold and has not been this low since November 2009. Adding some VLTR to the portfolio could be a nice valuation play for 2013. Risk of the stock further depreciating is not too much of a concern, since the stock has decreased by over 36 percent in the past six months.

Source: Caterpillar And FedEx: 2 Indicators The Global Economy May Be Trending Down