April 30 (Reuters) - 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 International.
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