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

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

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.

The article Billion-Dollar Fund Doubles Down on a Rebounding Economy originally appeared on and is written by Marshall Hargrave.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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