"I think Caterpillar was a good quarter," TheStreet's Jim Cramer said on CNBC's "Squawk on the Street" this morning.
He noted that if trends from 2016 carry into 2017, next year won't be great for the company.
But investors are anticipating a rebound in commodities in the second half of 2017, and China has turned, Cramer claimed.
"When you see commodity pricing bottom somewhat and you see a bottom in China and you see Baker Hughes (BHI) and Halliburton (HAL) going up because there's a lot in oil and gas, you start being able to build a thesis why capital goods, particularly Caterpillar, may not be a bad place to be," he said.
Especially when compared to consumer stocks, Cramer stated.
Recent performance at fast-food chain Sonic (SONC), retailer Lululemon (LULU), paint store Sherwin-Williams (SHW) and appliance company Whirlpool (WHR) make Cramer believe that people are staying home rather than going out and spending.
Caterpillar stock was down in late-morning trading on Tuesday.
Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of B-.
Caterpillar's strengths such as its good cash flow from operations, expanding profit margins and solid stock price performance outweigh the fact that the company has had somewhat weak growth in earnings per share.
You can view the full analysis from the report here: CAT
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 article's author.