CAT

CAT

In the Equipment Battle, Ag Wins

Shares of Caterpillar (CAT) have been steadily rising as infrastructure projects around the world have increased sales.  After seeing net income drop by more than 60% from 2007 through 2009, investors are now enjoying a rebound in earnings – primarily driven by emerging market demand.

Caterpillar is well known for it’s bright yellow industrial equipment – used heavily in a wide assortment of construction projects.  The company is also a leader in mining equipment and has recently taken steps to dramatically increase this business line.

If CAT is the 800 pound gorilla in the industrial equipment business, then Deere & Co. (DE)should be considered the equivalent in the agriculture equipment industry.  With an established base in the developed world, and exciting growth dynamics in emerging markets, DE is likely to be one of the major winners in the current agflation trend.

Both companies are leaders in their respective businesses.  But a number of global trends appear to favor agriculture growth over industrial production, a backdrop which should favor Deere over an extended period of time.

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