Caterpillar Drops Again; Is It a Buy?


In today's edition, industrials editor and analyst Brendan Byrnes discusses Caterpillar and its 2.5% drop on Friday. The stock was one of the Dow's top performers earlier in the year but has been on a downward trajectory since the middle of April. Caterpillar has now dropped 6.6% on the year versus the Dow's 4.5% gain.

Poor jobs data on Friday combined with some negative news from Wells Fargo were the catalysts that dropped Caterpillar on Friday. Wells Fargo removed the stock from its "priority stock" list and lowered its price target after conducting channel checks, though it reiterated its outperform rating. In the following video, Brendan outlines why Caterpillar's current valuation provides an attractive entry point for the stock. The company is integrating acquisitions, including that of Bucyrus, its largest ever, which should help Cat realize higher margins in its resource segment, though it has a very capable competitor in Joy Global. Check out the video for more on why Caterpillar looks attractive at its current price.

Caterpillar looks cheap right now and sports a 2.4% dividend that's above the market average. But that wasn't quite enough for our analysts, who picked out three different must-have Dow dividend stocks in our new special report: "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so just click here and get your copy today.

At the time thisarticle was published Brendan Byrnes owns shares of Caterpillar and Wells Fargo. The Motley Fool owns shares of Wells Fargo. Motley Fool newsletter services recommend Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Originally published