There's No Stopping This King of the Jungle
In the past few months, Caterpillar (NYS: CAT) , the Illinois-based construction and mining-equipment giant, has grabbed headlines with hints of the expansion plans it has up its sleeves.
Here's the lowdown on what's cooking.
Caterpillar's tie-in with Navistar International (NYS: NAV) has been a successful story ever since they began their 2008 alliance, and it appears their bond is strengthening further. The two companies are making some structural changes to their joint venture to create a business model that will help increase the global reach of their products. They're also about to complete the terms of a new business venture for developing new lines of on-highway and heavy-duty vocational trucks to be sold globally.
Growing markets, here I come!
Speaking of global reach, Caterpillar has its eyes set on emerging markets. A few weeks back, it joined forces with APR Energy to develop temporary power solutions targeting international power projects, especially in emerging markets. Caterpillar has massive plans in particular to gain a leadership position in China. In line with that goal, it recently announced a big R&D expansion in China catering to its global customer needs.
From increasing capacity to setting up several new facilities, Caterpillar isn't shying away from putting more and more of its money into emerging markets -- something other players in this segment are looking at, too. In fact, Caterpillar sees its acquisition of mining-equipment manufacturer Bucyrus as a crucial step toward gaining a stronger foothold in growing markets. One of the biggest feathers in Caterpillar's cap today, the Bucyrus purchase gives Caterpillar an excellent opportunity to lead from the front in the mining industry, capitalizing on the wide range of products Bucyrus has added to Cat's portfolio.
With the Asia-Pacific area becoming its second-largest revenue-generating market, it's no wonder that Caterpillar is so fond of the region!
Looking good on all fronts
So the plans look good, but how about performance? Well, I've written about how solidly the company's top and bottom lines have grown over the years. Caterpillar has more than $9 billion in cash and equivalents on hand, renders a superb return on equity of 35% even for its moderately high debt load, and offers a solid dividend yield of 2.3%.
Caterpillar's last quarter, during which it raised its full-year guidance, was terrific. More importantly, its latest global sales figures -- a robust 34% growth in August -- show the company's power to weather the economic slowdown.
The Foolish bottom line
This company looks poised to grow bigger, and I sure am falling in love with this Big Cat. How about you? Don't forget to add Caterpillar to your Watchlist, our free, personalized stock-tracking service.
At the time this article was published Fool contributor Neha Chamaria owns no shares of any of the companies mentioned in this article. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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