With successful online stock trading through advanced software, you will be able to identify stronger and weaker market segments. The mining sector is certainly in the latter category currently, though there could be a ray of hope.
CAT Holding Discussions Regarding Potential Sales
The no. 1 heavy machinery manufacturer in the world, Caterpillar ($CAT), has claimed to be seeing signs of improvement. More specifically, it has revealed that it has been holding more discussions in recent months regarding potential sales than in the past two to three years. This does inject a bit of optimism into the mining industry globally, which has been struggling with low demand overall. However, CAT cautioned that these discussions have not yet resulted in sales. The talks have only been in their early stages and no timeline has been set yet. CAT Group President, Resource Industries, Denise Johnson expressed her apprehension over whether those negotiations would materialize.While she believes there are indications of improvement, there have been no major movements from a sales perspective.
CAT has indeed been approached regarding potential deals in the past few months. This is an encouraging sign, but the company is still going through tough times. It has had to cut its full-year forecast for sales and profits repeatedly in the earlier months of this year. And the lay-offs and plant closures are continuing.
CAT Signals Market Condition
The reason Caterpillar is receiving so much attention is because its machines are expensive and massive, and are therefore only used in projects by governments and major companies if they are confident in their financial standing and if the economic outlook is positive. The performance of the company is therefore considered to be a kind of a gauge of the global health of the economy.
CAT believes there are opportunities cropping up in gold mining and other precious metals. Gold is particularly an area of opportunity in the coming 12 to 15 months. The recent price rally for gold is sure to motivate miners to restart projects that were sidelined, and also expand existing operations. The majority of CAT’s current sales are to the iron ore, coal and copper sectors. But gold is now becoming more important for CAT.
The company believes that any setback in the mining industry is sure to be cyclical, meaning the good times will return. And if Caterpillar succeeds, that could be an indication that the market has picked up.
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