By: Rob Wertheimer
Machinery stocks are down an average of 8% since news of possible steel tariffs broke. We see CAT as the largest opportunity in this move. Stocks that fell more like MTW or TEX may well rebound if the tariff fades, but could still see downside if not. CAT has overcorrected to steel either way. On a trade war, the sharp correction is more understandable, but so far we aren’t there. CAT also produces locally in most cases, though free trade is a core issue for the company.