In this video, MOtley Fool industrials analyst Blake Bos outlines what he sees as two interrelated risks facing Caterpillar (NYSE:CAT) today. First, Caterpillar is vulnerable to macroeconomics; it supplies equipment to cyclical industries and must anticipate slowdowns and upswings. Of late, it has not been particularly good at anticipating slowdowns, leaving the company with excess inventory. Second, much of Caterpillar's growth prospects are overseas, particularly in China and India, but this leaves Caterpillar vulnerable to currency fluctuations. Caterpillar also faces formidable competition from such companies as Komatsu that won't go away quietly in these markets.
Blake Bos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.