Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, heavy equipment giant Caterpillar (NYSE: CAT ) has earned a respected four-star ranking.
With that in mind, let's take a closer look at Caterpillar's business, and see what CAPS investors are saying about the stock right now.
Caterpillar facts
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Headquarters (founded)
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Peoria, Illinois (1925)
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Market Cap
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$18.60 billion
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Industry
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Construction and Farm Machinery and Heavy Trucks
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TTM Revenue
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$51.32 billion
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Management
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Chairman/CEO James Owens (since 2004)
CFO David Burritt (since 2005)
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Return on Equity (average last three years)
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46.3%
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Dividend Yield
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5.4%
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Competitors
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Deere (NYSE: DE ) ,
Terex (NYSE: TEX )
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CAPS members bullish on CAT also bullish on
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General Electric (NYSE: GE ) ,
Altria Group (NYSE: MO )
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CAPS members bearish on CAT also bearish on
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Ford Motor (NYSE: F ) ,
Bank of America (NYSE: BAC )
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Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.
Over on CAPS, fully 771 of the 856 All-Star members who have rated Caterpillar -- some 90% -- believe the stock will outperform the S&P 500 going forward. These bulls include Southie1967 and JBouchard, both of whom are ranked in the top 20% of our community.
Last month, Southie1967 tapped Caterpillar as a constructive way to play the infrastructure game: "The Obama administration stimulus package will focus specifically on infrastructure, which will create jobs and demand in the construction industry. [Caterpillar] will be rewarded."
In a pitch from last week, JBouchard follows that bullish line of thinking:
Graham formula gives me a fair value of $46.75 using current EPS ($6.02) and book value ($15.99). Using the more conservatives EPS from 2005 ($4.20), I get a fair value of almost $39. That gives me a margin of safety between 10% and 25%.
There will be massive injection of cash into infrastructure restoration and rebuilding to fight off the recession, which should be a positive factor for Caterpillar. That will be more than offset, though, by decreased investment in the mining and oil sectors. ... And the time to buy a solid company like Cat is when things are dire.
What do you think about Caterpillar, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 125,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.
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