Mega-Growth! CNH Global NV (CNH), Caterpillar Inc. (CAT), Deere & Company (DE), And One Giant Investor

The company said that normally, Caterpillar Inc. (NYSE:CAT) and its dealers often piled up their inventory in the first quarter to prepare for the higher demand throughout the year. However, Caterpillar Inc. (NYSE:CAT) had to reduce its inventory by $500 million, whereas last year, the company had increased its inventory by about $2 billion in Q1 2012.

Caterpillar Inc. (NYSE:CAT) is the biggest player in the construction and mining equipment industry with $58.3 billion in total market cap. The company is trading at around $89 per share. At the current trading price, Caterpillar has an expensive valuation at 9.13 times EV/EBITDA.

Deere has the highest EV multiple

Deere & Company (NYSE:DE) is also a big U.S. agricultural and construction company operating in three main business segments: Agricultural and turf, construction and forestry, and financial services. Most of Deere & Company (NYSE:DE)’s revenue, $27.1 billion, is generated from the agriculture and turf segment. This segment is also the biggest operating profit contributor with more than $3.9 billion in profit, while the construction and forestry segment only generated $476 million in operating income.

Deere & Company (NYSE:DE) has kept innovating itself. Some of its most powerful machines, including tracked feller bunchers and tracked harvesters, could increase customers’ productivity with “an updated boom structure and cooling system for all models.” Moreover, with the Rapid Cycle System, the boom operation could become much faster and simpler.

Neil Harber, the product marketing manager commented: “We’re confident our customers will appreciate the higher productivity rates, increased uptime and lower daily operating costs with these improvements to the tracked feller bunchers and harvesters.” Deere & Company (NYSE:DE) is trading at $92.30 per share with a total market cap of nearly $36 billion. The market values Deere & Company (NYSE:DE) at an expensive 10.57 times EV/EBITDA.

In terms of dividends, Caterpillar and Deere offer investors a similar dividend yield of 2.30% and 2.20%, respectively. CNH hasn’t paid any regularly dividends to its shareholders yet. In the middle of 2012, the company had paid a special dividend of $8.50 per share.

My Foolish take

CNH seems to be a good pick because of its lower valuation. Investors should consider both Caterpillar and Deere as well due to their decent dividend yield, the lowest valuation among peers, and global leading position in the construction and mining equipment industry.

The article Should We Follow Mason Hawkins Into This Stock? originally appeared on and is written by Anh HOANG.

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