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Caterpillar ( CAT) is having a great year in 2012 (it shows up on a recent list of the 5 Best-Performing Dow Stocks in 2012). Since the first trading day of the new year, shares have rallied by more than 25%, more than doubling the S&P's performance over that same period.

That's been a very good thing for fund managers; institutions picked up 1.65 million shares of Caterpillar last quarter, making it the third-most bought industrial stock of Q4. One buyer was Fortress Investment Group, which initiated a new 38,000-share position in the stock.

CAT is the biggest heavy equipment manufacturer in the world, serving the agriculture, mining, and construction industries with tractors, combines, backhoes, excavators and the like. The firm boasts an absolutely massive dealership network that spans the globe -- and as a result, CAT's primed to take advantage of demand in emerging markets like China and India.

While competition is strong in the heavy equipment business, Caterpillar boasts one of the strongest brands out there and the wherewithal to support massive R&D spending to keep it ahead of peers.

Thanks to a massive installed base, CAT is also able to generate significant service revenues. Today, those high-margin service calls make up almost half of the firm's sales; as the Caterpillar equipment worldwide ages, the firm should be able to take home consistent service fees to keep those machines working. Until owners are ready to upgrade to a new CAT model, that is.

This is another name that has strong tailwinds at play in 2012. With the firm's credit arm holding up pretty well during the recession, investors will be more apt to give CAT the benefit of the doubt during the next economic pullback.

Caterpillar also shows up on a list of 5 Stocks to Saely Make Money in Emerging Markets.

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