Here is an economic tip. If you look at when companies make the most money, it is when they are expanding faster than they can hire people. During this period, their employees have to work harder and work some over time. It is not a pleasant time inside the company, but during this stressful period is when they actually make the most money. Does this sound like the situation that we are now in? You bet! As companies "catch up" and the companies becomes more "relaxed" and profits go down.
Here is another one. Look at Caterpillar. Most people do not know that for every dollar of new equipment they sell, they sell over 40 cents of spare parts. Caterpillar has the strongest dealers of any of their competitors and have a gigantic installed base of long lived equipment. With growth in the over all economy, there is a big demand for more and more of their equipment. If they can't meet those orders, their customers will have to invest in their "old" equipment and that means more sales of spare parts. When this happens, Caterpillar's profits will go even higher due to the higher margin spare parts sales. See how that works?
Watch companies that have "long lead times". This is a very good sign. Also, look at companies who claim that they can not find enough qualified workers. Those are good signs for profit.
Here is another one. Look at Caterpillar. Most people do not know that for every dollar of new equipment they sell, they sell over 40 cents of spare parts. Caterpillar has the strongest dealers of any of their competitors and have a gigantic installed base of long lived equipment. With growth in the over all economy, there is a big demand for more and more of their equipment. If they can't meet those orders, their customers will have to invest in their "old" equipment and that means more sales of spare parts. When this happens, Caterpillar's profits will go even higher due to the higher margin spare parts sales. See how that works?
Watch companies that have "long lead times". This is a very good sign. Also, look at companies who claim that they can not find enough qualified workers. Those are good signs for profit.
