Caterpillar Upgraded and Ford's 2015 Mustang Debut Nears


The Dow Jones Industrial Average is trading in positive territory Monday afternoon, up 0.20%, as the Thanksgiving holiday and shopping season approaches. Investors are obviously hoping for a better-than expected shopping season in which consumers recklessly unload their wallet for all sorts of gifts. However, information suggests the opposite; it seems consumers are willing to spend more this year but are also doing heavy research regarding prices. That's led to heavier discounts from retailers and could result in lower margins during the holiday season -- a key factor for retail investors.

Caterpillar product floor. Photo Credit: Caterpillar.

An unlikely hero is trying to lead the Dow higher today. Caterpillar has had an awful year but finally received some good news today. Bank of America raised shares of the heavy-equipment manufacturer to buy, from a neutral rating, and also raised its price objective from $87 to $100.

"While the mining and construction equipment outlooks remain murky, the Power Systems business should put a floor under earnings, in our view," analysts Ross Gilardi and Michael Feniger wrote in a note, according to MarketWatch.

Caterpillar's construction and mining business does look bleak in the near term. However, if you believe its power systems business can sustain the company until its other segments improve, Caterpillar will consistently return some value to shareholders while you wait. Consider that even during the company's horrible performance this year it repurchased $2 billion of common stock and increased its dividend by 15% in the second quarter.

Outside of the Dow Jones Industrial Average, Ford is counting down the days until it unveils the complete redesign of its iconic muscle car, the Mustang.

"Expect an exciting day on Dec. 5," Ford President of The Americas Joe Hinrichs said when asked about the 2015 Mustang unveiling by MLive at the 2013 LA Auto Show. "I'm biased, but I think you'll be really impressed."

Sales of the Mustang bottomed during the recession and failed to climb back to relevancy as consumers opted for better fuel economy.

Graph by author. Information from Automotive News DataCenter.

That looks to change, for a couple of reasons. First, Ford will be offering an EcoBoost engine option for the Mustang that will fit the need for those wanting fuel economy. The EcoBoost will be a turbocharged 2.3-liter, four-cylinder engine that puts out more than 300 horsepower.

To keep its loyal muscle car enthusiasts happy, Ford will of course offer the standard V8 engine that is rumored to put out as much as 450 horsepower. When the folks at the Blue Oval were talking to consumers regarding the Mustang's design, the company hinted it would have a more modern look to appeal to a wider audience. It's a good move by Ford, and will enable the 2015 Mustang to sell internationally on a wide scale, which it hasn't yet done.

This is just another step in CEO Alan Mulally's "One Ford" plan in which all vehicles will appeal to a global audience and will be designed with improved fuel economy and value in mind. If Ford's last few very successful redesigns are any indication, my bet is the 2015 Mustang will continue the streak.

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