The following video is part of our "Motley Fool Conversations" series, in which Industrials editor/analyst Isaac Pino and Research Analyst Lyons George discuss topics across the investing world.
The components of the Dow are often highly-exposed to the broader economy, and management at these companies spend vast resources trying to predict demand around the world. For Caterpillar, however, this is particularly important, as sales of its products can be the ultimate predictor of market sentiment. Fortunately, the company recognized the opportunity for a falloff prior to the recent recession.
Caterpillar's approach draws a stark contrast to other cyclical companies like the financial institutions in the Dow, like Bank of America and JPMorgan. Whereas leadership at these firms seemed utterly unaware that the boom times could ever end (and in JPMorgan's case, still appear oblivious to their underlying businesses), Caterpillar's chief Douglas R. Oberhelman was intent on preparing his company for the worst. For investors, this preparation paid off, and the company's stock has soared since 2009. Isaac and Lyons provide insight into the drivers for this company going forward.
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Isaac Pino has no positions in the stocks mentioned above. The Motley Fool owns shares of Bank of America and JPMorgan Chase & Co. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.