TheStreet Ratings quantitative stock model maintains a Buy recommendation on Caterpillar Inc. (CAT) - Get Report . Since the stock was upgraded to Buy from Hold on April 25, 2018, the shares have risen, fallen and commenced their next upswing.
If you prefer exchange-traded funds to holding individual stocks, you may want to consider funds with a significant percentage of holdings concentrated in Caterpillar stock. Eight of the nine funds with at least 3% of their assets in Caterpillar are Buy rated, including: Boulder Growth&Income Fund (BIF) - Get Report rated B with 5.7% of assets in Caterpillar; SPDR Dow Jones Industrial Average (DIA) - Get Report rated A with 4.3%; Nuveen Dow 30 Dynamic Overwrite (DIAX) - Get Report rated A- with 4.3%; and Industrial Select Sector SPDR (XLI) - Get Report rated B+ with 4.0%.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CATERPILLAR INC as a Buy with a ratings score of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, robust revenue growth, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the analysis by TheStreet Ratings goes as follows:
- CATERPILLAR INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, CATERPILLAR INC turned its bottom line around by earning $1.26 versus -$0.13 in the prior year. This year, the market expects an improvement in earnings ($10.85 versus $1.26).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 767.2% when compared to the same quarter one year prior, rising from $192.00 million to $1,665.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 37.1%. Since the same quarter one year prior, revenues rose by 30.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 38.96% is the gross profit margin for CATERPILLAR INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.94% is above that of the industry average.
- Powered by its strong earnings growth of 756.25% and other important driving factors, this stock has surged by 25.59% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: CAT
-- Reported by Kevin Baker in Palm Beach Gardens, FL
Disclosure: Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet, Inc. or any of its contributors.