Caterpillar Expected to Perform Well As It “Feeds” Mining, Oil & Gas Producers
Dow 30 Component Caterpillar, Inc. (CAT) is the world’s chief manufacturer of diesel and natural gas engines, construction and mining equipment, industrial gas turbines, and diesel-electric locomotives. Caterpillar, Inc. also works to make sustainable progress possible and contributes to driving positive change on every continent.
With mining and oil companies looking to update and replace aging equipment, Caterpillar, Inc. could see a spike in revenue & income.
Chad Dillard, a Deutsche Bank analyst, stated, “Caterpillar is earlier in its cycle than the market gives credit and our preferred way to play the early stage equipment replacement cycle. Mining and oil & gas producers have systematically underinvested in equipment and are in the early stages of replacing the equipment bought during the height of the commodity supercycle.”
Current estimates show that it is possible that mining and oil and gas sales could grow at 30 and 10 percent respectively for the next few years.
With its mining and oil and gas markets, Caterpillar should be more cushioned than other companies in the soft U.S. construction industry, with only 20 percent of its income stemming from equipment sales.
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