Market value: $91.8 billion
Dividend yield: 2.0%
Analysts’ opinion: 8 strong buy, 2 buy, 10 hold, 0 sell, 0 strong sell
Shares in Caterpillar (CAT, $153.69) have stumbled lately. The threat of a global trade war will do that to the world’s largest maker of construction and mining equipment. Free trade is critical to CAT, to be sure, note analysts at William Blair, which is partly why they rate shares at “Market Perform” (equivalent of “Hold”). But they also note that Caterpillar, a component of the Dow Jones industrial average, is “probably (in) the best position it has ever been.”
Although trade-war rhetoric might be on the rise, it remains just that. Meanwhile, a synchronized global economic recovery remains very real. “Caterpillar (has) seen a major increase in demand for products with the resurgence of the global economy and tax reform in the United States,” William Blair notes.
Caterpillar’s stock fetches just less than 15 times expected earnings, and yet earnings are projected to rise an average of 20% a year for the next five years. Trade risks remains, but a good chunk appears already to be reflected in CAT’s price.
