Caterpillar Inc. (CAT) is still a hot stock as growth in the emerging markets remains strong.
Caterpillar manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines worldwide.
It is usually among the first to see a recovery and also among the first to anticipate a coming slowdown. So far, the company is not signaling a slowdown is imminent. Actually, to the contrary.
Expanding in Brazil
The emerging markets are where it’s at and Caterpillar signaled as much when it announced on Sep 1 that it was expanding its manufacturing operations in Brazil by buying a 50,000 square meters facility in Compo Largo, Parana State and increasing its capacity at the flagship facility in Piracicaba.
The investment will total $180 million and will add 1,000 new jobs. The new facility is expected to be running by 2011.
It will manufacture backhoe loaders and small wheel loaders, which are currently produced at Piracicaba.
Zacks Consensus Estimates Rise
Analysts have revised their estimates higher for 2010 and 2011 in the last month since the company reported its second quarter results.
The 2010 Zacks Consensus is up by a penny in the last 30 days to $3.73 per share. This is earnings growth of 71%.
For 2011, analysts expect another great year for growth, with another 37% earnings growth.
The 2011 Zacks Consensus is up 5 cents to $5.11 per share.
Surprised on Earnings 6 Quarters in a Row
The company has recently put together a string of estimate surprises as the global recovery has taken hold.
These surprises have followed along with the increases in the stock price.
Solid Dividend
Caterpillar pays a dividend with a yield of 2.6%. This is much higher than the industry, which pays just 0.2%, on average.
Caterpillar is a Zacks #1 Rank (strong buy) stock. It is scheduled to report third quarter earnings on Oct 19.
Read the July 26, 2010 article.
Update to Previous Growth & Income Zacks Rank Buy Stocks
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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
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