Caterpillar Inc. (CAT) - Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies.
Valuation and Price Targets – Caterpillar sells for under 16 times this year’s earnings but under 12 times 2012’s consensus. CAT sells for less than .7 its expected PEG. It has an A rated balance sheet. Caterpillar has crushed earnings expectations each of the last four quarters and estimates for 2011, and 2012, have significantly been uplifted over the past ninety days. It has a dividend yield of 1.7%. Caterpillar is selling at around $105. Price targets are $148 at Credit Suisse, $142 at S&P and RW Baird has their target at $144.
Deere & Company (DE) -Deere & Company provides products and services primarily for agriculture and forestry worldwide. The company operates in three segments: Agriculture and Turf, Construction and Forestry, and Credit. The Agriculture and Turf segment manufactures and distributes a line of farm and turf equipment, and related service parts, which include large, medium, and utility tractors; loaders; combines, cotton, and sugarcane harvesters and related front-end equipment; sugarcane loaders; and tillage, seeding, and application equipment.
Valuation and Price Targets – Deere sells at less than 14 times this year’s earnings and under 12 times 2012’s projected earnings. DE has easily exceeded earnings expectations each of the last four quarters and estimates for 2011, and 2012, have been raised over the past ninety days. It has a dividend yield of 1.6%. Deere sells at just over 1.3 times trailing sales and is selling for $86 a share. Price targets are $111 at Credit Suisse, $115 at S&P and UBS also has a price target of $115 on Deere.
Johnson Controls (JCI) - Johnson Controls, Inc. engages in building efficiency, automotive experience, and power solutions businesses worldwide. Its building efficiency business designs, produces, markets, and installs integrated heating, ventilating and air conditioning systems, as well as building management systems, controls and security and mechanical equipment. This business also provides technical services, energy management consulting, and operations of real estate portfolios for the non-residential buildings market. In addition, this business offers residential air conditioning and heating systems, and industrial refrigeration products.
Valuation and Price Targets – Johnson Controls is selling at under 16 times this year’s earnings but under 12 times next year’s consensus EPS. Revenues are projected to grow in the low double digits for both 2011, and 2012. JCI sells at less than 1 times its projected PEG and .7 times trailing revenues. Johnson Controls has a 1.7% dividend yield and is selling around $39 a share. Price targets are $53 at Credit Suisse, $52 at Morgan Stanley and $48 at S&P.