In today’s edition, industrials editor and analyst Brendan Byrnes discusses whether Caterpillar is an overrated or underrated Dow stock. According to S&P Capital IQ, the average analyst recommendation for Caterpillar is 2.1 (1 = strong buy, 5 = strong sell), and the stock sports a four-star rating from our CAPS community. That’s actually about middle of the road as far as analyst recommendations for Dow stocks.

Brendan thinks this makes Caterpillar underrated. Currently one of Brendan’s top three Dow stocks, Caterpillar was one of the top performers on the Dow before falling big in the past few months. Much of this dip is due to macroeconomic concerns, and Brendan thinks this makes an attractive entry point for long-term investors. Check out the video below for more on Caterpillar.

Caterpillar is the market share leader in an industry in which size matters, and its quality products, extensive service network, and unparalleled brand strength combine to give it solid competitive advantages. But it's also vulnerable to some outside forces that are currently pushing the stock down. Before thinking about investing in Caterpillar, you need to read all about the company's strengths and weaknesses in our brand-new report. Just click here to access it now.

Austin Smith has no positions in the stocks mentioned above. Brendan Byrnes owns shares of Caterpillar. The Motley Fool has no positions in the stocks mentioned above. 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.