A Tremendous Scramble for Laggards

 | Dec 09, 2013 | 1:55 PM EST  | Comments
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Two chronic disappointers are getting a lift Monday, and I think they have room to run: Deere (DE) and Caterpillar (CAT).

When Deere reported, the company knocked it out of the park. But, in typical Deere fashion, management also put out some projections that many regarded as disappointing. The stock rallied, then stalled. Now it is taking off again, as the company is actually buying in one-quarter of its shares. That's the power of a real buyback. It's launching the stock for certain.

As for Caterpillar, it's one of those stocks: People are just plain aghast that it could be this bad -- so aghast that they are starting to not care, and they just want exposure.

I can't think of a thing that's going right for Caterpillar right now, but maybe that's the secret to this one. Not much more seems like it could go wrong that hasn't already gone wrong, and yet shares stopped going down months ago. So why not buy, betting that something good will eventually happen? I think that kind of analysis, as hateful as it is to the bears, seems to have taken hold.

There's a tremendous scramble for laggards now. The laggards have to make good products, with a strong international presence, and with shares that have fallen way behind the market over a multiyear period. In other words, these two -- Deere and Caterpillar. And they could really romp higher.

Random musings: Speaking of laggards, we own Timken (TKR) for Action Alerts PLUS, and it is a real mess, but we continue to think that the insurgents who dumped management can make something happen here.

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