CNH Global NV (CNH), Deere & Company (DE), Caterpillar Inc. (CAT): Billion-Dollar Fund Doubles Down on a Rebounding Economy

CNH is the cheapest of the stocks on a forward P/E basis and has the lowest PEG ratio.

	CNH	CAT	DE	AGCO
Forward P/E	8.2	11.2	10.4	9.5
PEG ratio	0.79	0.85	1.16	1.23

CNH is also managing inventory nicely, at a time when other major equipment makers are seeing a backlog. Caterpillar remains affected by slowing demand and inventory correction as a result of higher production than demand. The biggest challenge for Caterpillar and Deere will be the continued right-sizing of production volumes, where both Caterpillar and Deere have lower inventory turnover ratios than CNH.

	CNH	CAT	DE	AGCO
Inventory turnover	3.44	2.37	3.13	3.63

Don’t be fooled

While I think Caterpillar Inc. (NYSE:CAT) is a long-term buy, I would wait for a better entry point. Meanwhile, CNH appears to be a solid investment opportunity based on valuation and a bustling agriculture market. What’s more is that Deere & Company (NYSE:DE) could also be an intriguing investment given its exposure, like that of CNH Global NV (NYSE:CNH), to the agriculture market. However, I prefer CNH given its greater international exposure, 62% of revenues outside of North American, compared to Deere’s 44%. CNH is also cheaper on a forward P/E basis.

CNH Global NV (CNH), Deere & Company (DE), Caterpillar Inc. (CAT): Billion-Dollar Fund Doubles Down on a Rebounding Economy

Published on May 21, 2013 at 5:34 pm by The Motley Fool in News

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