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Is Caterpillar Poised to Crawl Back?

By Brian D. Pacampara, CFA - Nov 15, 2012 at 11:44AM

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Market-trouncing returns could be written in this 4-Star.

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, heavy equipment giant Caterpillar ( CAT 1.59% ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Caterpillar and see what CAPS investors are saying about the stock right now.

Caterpillar facts

Headquarters (founded)

Peoria, Ill. (1925)

Market Cap

$53.0 billion

Industry

Construction and farm machinery

Trailing-12-Month Revenue

$67.0 billion

Management

Chairman/CEO Douglas Oberhelman

CFO Edward Rapp

Return on Equity (average, past 3 years)

32.2%

Cash/Debt

$3.4 billion / $39.9 billion

Dividend Yield

2.4%

Competitors

CNH Global (NYSE: CNH)

Deere ( DE 1.93% )

Terex ( TEX 4.36% )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 94% of the 6,024 members who have rated Caterpillar believe the stock will outperform the S&P 500 going forward.

Earlier this week, one of those Fools, adamlevy, touched on the tailwinds working in Caterpillar's favor:

China's economy looks to be moving back on track. Increased lending and approval of infrastructure projects will help the company going forward.

Also, U.S. construction outlook is good. 1 million net new house constructions are expected in 2013. Education, highway, and energy construction projects that were delayed in 2012 are expected to move forward in 2013 and 2014. The [Panama Canal] expansion is expected to be completed by 2015. There are a lot of prospects for Caterpillar in the US and abroad.

~$85 looks to be a new support level, and I expect shares to climb back to $115 levels.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Caterpillar may not be your top choice.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Caterpillar Inc. Stock Quote
Caterpillar Inc.
CAT
$204.49 (1.59%) $3.21
Deere & Company Stock Quote
Deere & Company
DE
$361.34 (1.93%) $6.83
Terex Corporation Stock Quote
Terex Corporation
TEX
$45.94 (4.36%) $1.92

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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