TEX - Caterpillar: Delivered Impressive 2023 Earnings The Stock Is Priced To Perfection

2024-03-14 05:36:54 ET

Summary

• Caterpillar is a leading supplier of heavy machinery with a strong brand reputation and an incredibly broad portfolio of products.
• The company benefits from a wide economic moat, massive macroeconomic investment into infrastructure spending, and improving operational efficiency.
• CAT generated strong returns in 2023, but the current share valuation is too expensive to justify building a new position in the stock.
• Cyclical demand for Caterpillar's products increases the risk of volatility in earnings during economic downturns.
• Hold rating issued.

Investment Thesis

Caterpillar ( CAT ) is an iconic company that has become a byword for heavy machinery and construction equipment. The firm focuses on producing a massive breadth of high-quality equipment and providing customers with extensive aftersales support.

I like Caterpillar's core business operations and believe 2023 will be a strong year for the firm. Excellent topline growth was complemented by operational efficiency improvements, which positioned Caterpillar in a superb position to continue generating long-term value for shareholders....

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