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Why Caterpillar Is Ready to Crawl Back

By Brian D. Pacampara, CFA - Apr 24, 2013 at 11:02AM

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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 -0.57%) 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

$55.1 billion

Industry

Construction and farm machinery

Trailing-12-Month Revenue

$63.1 billion

Management

Chairman/CEO Douglas Oberhelman

CFO Bradley Halverson

Return on Equity (average, past 3 years)

33.4%

Cash/Debt

$6.0 billion / $36.2 billion

Dividend Yield

2.6%

Competitors

CNH Global

Deere

Terex

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

On CAPS, 94% of the 6,088 members who have rated Caterpillar believe the stock will outperform the S&P 500 going forward.

Just yesterday, one of those Fools, Googlespooch, succinctly summed up the bull case for our community:

Caterpillar simply is the best at what it does: making heavy earth-moving machinery. This fact has helped to keep Caterpillar the industry titan in a complex, cyclical business. Caterpillar's strong financial standing and opportunities in China all seem to point to the company as a safe bet. In addition, at this current price, they seem undervalued which helps reduce downside risk. They also have a nice dividend yield of 2.6% which should help to reduce short pressure. Even though they have had some earnings weakness lately, I believe that they can bounce back in the coming quarters and years.

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Stocks Mentioned

Caterpillar Inc. Stock Quote
Caterpillar Inc.
CAT
$206.76 (-0.57%) $-1.18
Deere & Company Stock Quote
Deere & Company
DE
$364.62 (-1.10%) $-4.05
Terex Corporation Stock Quote
Terex Corporation
TEX
$32.39 (-1.64%) $0.54

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

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