3 Reasons Caterpillar Stock Could Soar Over the Next 16 Months (CAT)

- April 11, 2017

Caterpillar Inc. (NYSE:CAT) stock has plenty of upside for a couple of reasons. First, If the Trump administration and Congress can pass an infrastructure bill that ups spending, and Tax reform becomes a reality, Caterpillar stock would be a direct beneficiary. Second, CAT recently restructured several of its plants worldwide. Caterpillar Inc (NYSE:CAT) will proceed with the plant closure in Belgium in which 2,000 employees will be phased out by the end of this year. 

Caterpillar Inc. (NYSE:CAT) recently announced they will be closing a production facility in Aurora, IL. This will result in 800 more employees losing their job. Caterpillar Inc (NYSE:CAT) must take these actions to reduce manufacturing capacity and take operating costs out of their business to align with lower demand for their equipment. 

CAT recently reported total February retail sales of machines for the rolling three-month period declined 1% from the same period a year ago. That is the smallest rate of decline since December 2012. That is good news as retail sales of machines for the construction industry are turning positive for the first time since June 2014. If Trump gets his infrastructure bill passed, machine and equipment sales growth should no longer be a problem.

About Caterpillar Inc. (NYSE:CAT) 

Caterpillar stock supports a market cap of $55.27 Billion and is the World’s Largest Heavy Equipment Manufacturer in the World. Caterpillar Inc. (NYSE:CAT) was founded on April 15, 1925 and is headquartered in Peoria, IL. They engage in the manufacturing of construction and mining equipment.  Diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.

They also provide technology for construction, transportation, mining, forestry, energy, logistics, electronics, financing and electric power generation. In other words they are into just about everything!

A Catalyst for Caterpillar stock that might surprise you

Caterpillar is getting into the augmented reality (AR) business, which I have wrote about before, specifically with Himax Technology (HIMX).   From industrial to military applications,  entertainment and even driverless cars.  The potential for augmented reality (AR) is seemingly unlimited. And Caterpillar Inc. (NYSE:CAT) seems to agree.

On May 23 in Chicago, IL, Terri Lewis, Caterpillar’s Digital and Technology Director, will explain how one of the world’s best known heavy equipment manufacturers is using AR for maintenance and repair.  At Caterpillar, AR guides professionals through machinery troubleshooting and repair, instantly dispensing data that was traditionally only available via equipment manuals.

In industrial applications AR data is often delivered via head mounted displays, eyeglasses or handheld devices.  AR also benefits the less experienced worker, “augmenting” his or her knowledge to enable success with the task at hand, literally.

Conclusion

Caterpillar Inc. (NYSE:CAT) is streamlining their operation by reducing their workforce and implementing these new technologies, I believe they are turning a corner.  They are exploring the use of robotics and automation along with preventative measures for enhancing cyber security.

Also, using 3D printing with lights out manufacturing and virtual machine design. With all these changes they are making and the promised $1 trillion infrastructure bill coming, Caterpillar stock is one to watch , and possibly buy. If you are a long term investor, CAT stock is particularly attractive.

We believe Caterpillar stock has 30-40% upside in the next 16 months stemming from tax reform, increased spending on infrastructure, and improved CAT stock owner sentiment from investments in AR and other technologies alike.

 

This entry was posted in 2017 Stock Outlook, Industrials, Members and tagged , . Bookmark the permalink. Follow any comments here with the RSS feed for this post. Post a comment or leave a trackback: Trackback URL.

Post a Comment

You must be logged in to post a comment.







Join the 100s Who Beat the Market with a BNL Membership

See What Current Members Are Saying

My Complete Access BNL Membership Includes

  • No contract. Guaranteed results. Cancel anytime.
  • Unrivaled Performance. The BNL Portfolio has outperformed the S&P 500 by 150% since October 1, 2015
  • Access. You know what goes in the BNL Portfolio, David’s Dividend Portfolio, and Eddy’s Options.
  • Alerts. You know when a trade is made in all three managed portfolios with application, text, and email alerts
  • Transparency. Verifiable trade records for the BNL Portfolio, David’s Dividends, & Eddy’s Options
  • Research. We have coverage on more than 50 companies
  • Results. Our 10 highest rated stocks outperformed the market by 134% last year
  • Live Chat. Join 100s of other members in an exclusive Members Only section with Chat
  • Growth. We are the fastest growing financial research platform in our industry.
  • Build My Portfolio. You give us your goals, we help you get there
  • Premium Content. Unlock hidden sections in each article. You also get Value of the Month selections and BNL Research Reports.
  • Community. We have professionals and beginners; retirees and college students; the 99% & 1%, but here, we are all equal.


Like what you see? Sign up for our newsletter and get the latest stock picks straight to your email!