Re: Re: IH Failure - tractor building business in

Posted by Steve - IN on November 02, 2003 at 10:45:00 from (12.222.30.13):

In Reply to: Re: IH Failure - tractor building business in gene posted by Brad Kimball on November 01, 2003 at 18:04:53:

Brad -- that's the 64,000 dollar question. If we both knew; we'd be relaxing on our tropical islands. Here's my estimation, though: DE is trading at 22.8X and has a debt/equity ratio of ~80/20. Priced to perfection, and highly leveraged. One hiccup and it's tank city. I think it sees 35 a share long before it sees 75 a share, so much more downside risk than upside gain potential at this point. Go short or load up on puts - but a more obvious short might be Cummins, which has a ticker symbol that can't be posted on this board, the first three letters of the company name, and is trading at ~300x earnings.

If you're only looking to go long in equipment stocks, CNH might be the worst place to put the money. Negative net worth and run by Europeans who vacation a month or more out of every year. Sounds like colekicker works there, so for his sake and the sake of the stepfather outfit of our Farmall tractors - lets hope it's a good turnaround. But if it's your money and you want to sleep at night -stay away. AGCO only grows by acquistion, it seems. They're due for a fall when they run out of outfits to buy. The place to go would be the place with the most growth possibility -- and that's probably a China/Asia play. KUB, Kubota, is a lower risk/lower growth play. If you feel aggressive; try CYD, China Yuchai - a kind of Chinese Cummins. Same kind of play in India with Tata or Mahindra. Maybe safer to park in CHN or IFN (China and India exchange traded funds). I've got some money there and have done very well this past year, but it's high risk money (as all high growth money is) - so you should be set to dump at a moments notice, just set yourself rolling 5% stop loss points and you should be OK.

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