Look In Your Own Backyard
Tuesday, April 4th, 2006
By Mitchell Clark, B.Comm. for Profit Confidential
Who would have thought that one of the best China investment opportunities would be Caterpillar Inc. (NYSE/CAT). This well- known Dow stock continues to be a market leader on the stock market, capitalizing on the global economy’s demand for construction and mining equipment.
Caterpillar’s been doing business in China for a long time. The company sold its first product in that country in 1975, and opened its first office in Beijing in 1978. Then, in 1980, the company began licensing its products to Chinese manufacturers and now, the company operates some 13 production facilities (joint ventures and fully owned subsidiaries) along with a growing dealer network. This is what the company’s been doing in many countries for years.
Recently, Caterpillar opened a brand new China Distribution Center in Shanghai that will distribute parts to Caterpillar dealers throughout the country. Slowly, and methodically, Caterpillar has built its business (and reputation) in China and the company should serve as a great case study in business schools on how to establish a large business in an untamed country.
Despite Caterpillar’s success on the stock market over the last three years, it still trades for a reasonable valuation on the market.
Caterpillar really is a great success story and its growth is particularly impressive considering the company’s massive size. When there is a lot of hype about an industry, or a country in this case, it very often pays to look in your own backyard to profit from growth trends in the global economy.
Caterpillar is a great example of a successful China play. You don’t even have to invest offshore to capitalize on the trend. The good news is that Caterpillar’s growth in China is only at its infancy.
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Tags: china, Chinese Inflation, Chinese stock, stock market
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Mitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.



