People watch stocks for different reasons -- they're waiting for a dip in price, watching for a specific catalyst, gathering all the news and information that might affect stocks they already own, or considering a sell. Regardless of their motivation, we can better understand market sentiment by seeing who's watching what. With the Fool's free My Watchlist service, we have tens of thousands of people telling us the businesses that have, for whatever reason, piqued their interest.
With this data we have come up with a new metric, watch interest, to inform investors what stocks their peers keep tabs on in each industry. In the case of the machinery industry, watch interest is the percentage of people keeping an eye on machinery stocks in general who are specifically watching each company. By looking at what stocks catch people's interest the most in an industry, you can get ahead of the curve by finding hot stocks that you might have otherwise overlooked. The machinery industry has been chugging along and investors who have been paying attention have been reaping the rewards.
The most-watched machinery stock is...
Looking at the aggregate data, we see that Caterpillar (NYSE: CAT ) is above the rest in terms of watch interest and for good reason. As CAPS All-Star TSIF wrote last month:
Caterpillar has had a fairly volatile three months since it steadily climbed from $60 to break $100 in March. The oscillations up to $115 have been gallant and purposeful, but the retreat back to $100 on both occasions was just as clear. The bears and bulls have set the lines and a break one way or the other will be very pronounced. I believe Caterpillar, Inc can consolidate and break out. Major purchases were put off during the recession, but this just lead to older, less productive equipment in the field. The earthquakes, tornados, floods, and possibly soon hurricanes will continue to place a heavy demand on the equipment Caterpillar, Inc is famous for. The Federal government cutbacks may hurt somewhat, but sales to the mining industry also continue to produce sales as commodity prices send new players into the field. Caterpillar, Inc is also well known for its locomotive engines and this industry also continues to flourish as fuel prices stay high.
Margins are average, in the 10% range, but ROE remains 30 %. Debt load is high, but this is due to their financing division and is well supported by cash flow. The quarterly dividend is also well supported by cash flow and has been increasing by about 6% per year. Caterpillar is not afraid to find areas internationally to grow and they are currently looking to expand in countries such as China, India and Brazil where infrastructure spending is forecast to increase. Cleanup in Japan will continue, and it's possible that well known Japanese players in construction equipment, such as Komatsu Ltd, will be hampered for several quarters. Overall, I'm not impressed with analysts calls, but they are generally giving the CAT thumbs up with 30-40% potential growth the next two years and a one year target of $131.
Here are the rest of the top 15 most-watched companies in the industry with their watch interest along with the stocks' CAPS rating to show the sentiment of our investing community.
| |
Company
|
Market Cap (millions)
|
CAPS Rating (out of 5)
|
Watch Interest
|
| 1 |
Caterpillar (NYSE: CAT ) |
$69,498 |
*** |
17.3% |
| 2 |
Deere (NYSE: DE ) |
$33,493 |
**** |
7.7% |
| 3 |
Westport Innovations (Nasdaq: WPRT ) |
$1,280 |
***** |
5.9% |
| 4 |
Tata Motors (NYSE: TTM ) |
$13,571 |
***** |
4.8% |
| 5 |
Cummins (NYSE: CMI ) |
$20,311 |
**** |
4.5% |
| 6 |
Ingersoll-Rand (NYSE: IR ) |
$14,423 |
***** |
3.7% |
| 7 |
Manitowoc (NYSE: MTW ) |
$2,109 |
**** |
3.0% |
| 8 |
Middleby (Nasdaq: MIDD ) |
$1,645 |
**** |
2.9% |
| 9 |
Joy Global (Nasdaq: JOYG ) |
$10,154 |
**** |
2.3% |
| 10 |
Eaton (NYSE: ETN ) |
$17,261 |
**** |
2.1% |
| 11 |
Illinois Tool Works (NYSE: ITW ) |
$28,168 |
***** |
2.0% |
| 12 |
Mueller Water Products (NYSE: MWA ) |
$533 |
**** |
1.9% |
| 13 |
Lincoln Electric (Nasdaq: LECO ) |
$2,945 |
***** |
1.5% |
| 14 |
Dynamic Materials (NYSE: BOOM ) |
$295 |
***** |
1.5% |
| 15 |
Oshkosh (NYSE: OSK ) |
$2,737 |
*** |
1.3% |
Source: Motley Fool, Motley Fool CAPS.
Whether you're keeping an eye on the industry stalwarts like Caterpillar or are watching an up-and-comer like Mueller Water Products, it pays to watch. We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service. Click here to start now.
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