Caterpillar – Up 30% With More To Go
For two years following the March 2009 bottom, Caterpillar (CAT) led the stock market ever higher. It even gave Apple (AAPL) a run for its money. Then it ran into two downdrafts this year. The first, April-June, was a valuation adjustment in line with the stock market. The second, July-September, was a recession fear buzz saw. For cyclical companies like Caterpillar, recessions are destroyers of profitability and investors’ returns. Adding in previous expectations of high growth and the stock’s dramatic rise made CAT particularly vulnerable. These conditions produced a 35+% drop (meaning a 50+% rise was needed to reclaim its lost ground).
Clearly, CAT participated in the October rally, rising over 30%. So, now what? Does that take it back to a more reasonable valuation? Or is there still plenty of room to grow? I believe it’s the latter, and here’s why…
This article is posted on SeekingAlpha.com
