April 30 Caterpillar Inc shares rose 8
percent over the past week on strong first quarter earnings but
could rise another 20 percent over the next year, including the
3-percent dividend, Barron's wrote over the weekend.
"Perhaps no company in the U.S. is better positioned" to
benefit from President Trump's agenda, the business weekly said.
While Caterpillar has been boosted by a rebound in
commodities prices that preceded Trump's election victory in
November, the company is seeing increased inquiries from U.S.
clients heartened by "pro-business policy in regards to
infrastructure and tax reform," it said on its earnings call.
Caterpillar was hard-hit by the commodities decline that
began in the summer of 2014. The manufacturer had made a big bet
on mining, paying $8.6 billion including debt for Bucyrus
Declines in natural gas prices caused power companies to
switch from oil to gas, crushing demand for the mining machines
that were a key reason for the Bucyrus deal. Now mining is on
the rebound and Caterpillar, which sold 70 mining trucks last
year, could sell twice as many this year, Barron's said, citing
the most recent earnings call.
Despite the positive results, Wall Street analysts remain
conservative about Caterpillar's earnings prospects, Barron's
said. But even if earnings roughly double to $8 per share as
predicted by 2020, shares, which trade at 26 times estimated
2017 profit, would be at 13 times earnings.
(Reporting by Dan Freed in New York; Editing by Nick Zieminski)