Why Caterpillar Inc. (CAT) & Alcoa Inc (AA) Are Down Year-to-Date

The aluminum company is operating in an industry in which the lowest-priced producer wins, and there isn’t a whole lot the company can do differentiate its product from the competition. In the past, we’ve seen Chinese companies move into a market and take control. The U.S. steel industry, for example, was at one time a dominating force, but now it’s a weak and unimportant player. I believe Alcoa Inc (NYSE:AA) is heading down a path of the likes of the one United States Steel Corporation (NYSE:X) has trod.

On the other hand, though, I think Caterpillar Inc. (NYSE:CAT) can turn around the ship, because at the end of the day it has a competitive advantage over the competition. Its product is of high quality, and the company has built a well-known brand. While I don’t believe Caterpillar Inc. (NYSE:CAT) will recover this year, I think it will in the future.

The article Why Caterpillar and Alcoa Are Down Year-to-Date originally appeared on Fool.com is written by Matt Thalman.

Fool contributor Matt Thalman and The Motley Fool have no position in any of the stocks mentioned.

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