Caterpillar's (NYSE:CAT) earth-moving first-quarter results prompted investors to bid its stock up 4% in heavy trading yesterday.

The heavy equipment maker enjoyed a 34% increase in its top line, as revenue climbed to $6.47 billion. Earnings, meanwhile, went ballistic, surging 213.5% to $1.16 per share from $0.37.

The real story, though, may be management's bullishness on the global economy. Chairman and CEO Jim Owens commented that the world economy is on track to put forth "one of the strongest, broadest recoveries in years" and, that as a result, "sales opportunities are increasing." All of these comments might be dismissed as wishful thinking if Caterpillar didn't back it up with its expectations.

Previously, the firm was projecting that 2004 sales would grow 12% and earnings would increase 40%, a fairly robust forecast to begin with. Now, Caterpillar is looking for a 20% rise in revenue and a 65% to 70% jump in earnings, a forecast that can safely be called blowout.

Somewhat surprisingly, first-quarter gains were greatest in Latin America, as machinery sales in the region surged 61% and engine revenue rose 59%. Latin America and the Caribbean economies grew 1.3% last year and are expected to grow 3.9% this year. While that would be a significant improvement, the region is still struggling and is the slowest growing among emerging markets. That makes Caterpillar's performance there all the more impressive.

For the full year, the firm is banking on a 32% increase in North American sales to drive results. The forecast assumes continued strong demand for housing, a recovery in commercial construction, and increased highway funding. The first two assumptions rely on the Fed to keep interest rates steady, which in the short term appears likely. As for highway funds, all current federal spending proposals exceed 2003's outlay, with hikes anywhere from $38 billion to $100 billion.

Admittedly, Caterpillar shares are already near their 52-week high, trading at nearly 27 times trailing earnings. On a forward basis, though, that multiple shrinks to just 16. If you believe the company's outlook for itself and the global economy, Caterpillar should be on your radar screen.

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Fool contributor Brian Gorman is a freelance writer living in Chicago, Ill. He does not own shares of any companies mentioned here.