BOSTON (TheStreet) -- A culmination of negativity is weighing on stocks. A pending debt ceiling breach in the U.S. is perhaps the greatest contributor to investor pessimism.But, it isn't time to abandon equities, especially given that the 10-year Treasury is yielding a paltry 2.9%. It may be best to look at international growth stocks.
Similar to Chevron, Caterpillar is a globally crucial firm. The maker of farming, construction and mining equipment, which purchased Bucyrus for $8.8 billion in the fall, has been a top-performing industrial stock since the recovery commenced, in large measure due to its sales growth in emerging markets, like China, which are investing heavily in their infrastructure. Cat has increased sales and net income 57% and 198% during the past 12 months. The Illinois-based company has a reasonably valued stock, in spite of its 62% jump in the past 12 months. Cat trades at a forward earnings multiple of 12 and a cash flow multiple of 14%, 25% and 29% industry discounts. Researchers expect Cat to announce earnings growth of 61% and sales growth of 28% when it reports its second-quarter results on July 22. Of the analysts evaluating Cat, 15, or 65%, advocate purchasing its stock and eight, or 35%, recommend holding it. None suggest that investors cut and run. Credit Suisse expects a 37% rise to $148. With pessimism abound, investors should investigate the mega-cap growth names for an ideal combination of safety, dividends and upside potential.
-- Written by Jake Lynch in Boston.
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