Nine Lives Up. CAT Taken to the Tanner. (CAT)

As we often say, the difference between the economy and the stock market is as vast as that between heaven and earth.

And so, too, between a company’s business performance and that of its stock.

How to Skin a CAT

Caterpillar Inc. (NYSE:CAT) is the world’s largest construction-equipment manufacturer.  It’s also a paid-up member of the S&P500 and the Dow Jones Industrial Index.

This year (2022), Caterpillar crushed both its peers and the overall market, ending up 16% while the S&P lost 20%.  It managed to raise its dividend for a 29^th consecutive year, too, and currently sits at all-time highs, yet…

We foresee problems for the stock.

In part, because the current rate environment will put pressure on the company’s bottom line.

In part, because the general market will eventually weigh on CAT stock.

And finally, because CAT shares have leaped higher by too much too quickly, as the chart below will show.

Today’s trade could bag us a hefty 9900%.

But first, let’s consider the numbers.

Fundamentally, CAT’s a feline dream.

Sort of.

• P/E is a slightly elevated 17.50,
• Dividend Yield is 2.00%, but…
• Price to Book is an altogether jokey 8.07.
• Moreover, the company carries way too much debt—Debt/Equity is 2.34.

The stock is not a value proposition.

Yes, it has momentum, but as we all know, momentum can sour in an instant.

Now look at the chart—

It therefore behooves you to get on board early.

And may the best G-d win!

With kind regards,

Hugh L. O’Haynew

Follow @HughLOHaynew