Caterpillar Inc. (NYSE:CAT) shares opened the markets on April 4 in the green, after Goldman Sachs upgraded the construction equipment manufacturer to Conviction Buy with a retained price target of $120. From its previous close of $92.27, CAT shares are currently trading at $93.65, beating losses that welcomed the broader markets today.
Goldman research analyst Jerry Revich indicated optimism on the shares in his note to investors. According to a report, Revich said, “We see an attractive combination of (1) structurally higher mid-cycle EPS, (2) exposure to underinvested machinery markets in the early stages of recovery, (3) management strategy transition towards improving returns on capital (vs. market share in the last cycle), and (4) a ~20% underweight average mutual fund position.”
While the market is seeing a weak trading volume with Caterpillar Inc. (NYSE:CAT) on opening bell, the company with a $54.88 billion market cap is currently on the higher end of its 52-week range. It’s early performance today showed clear indication of outperforming versus the broader market indexes, like the NYSE which opened in red, thus traders are buying.
What Does The Smart Money Sentiment Say?
According to our data, Caterpillar Inc. (NYSE:CAT) gained slim confidence from a few hedge funds as we saw a jump to 34 in the fourth quarter of 2016 from 32 hedge funds who own CAT shares in the fourth quarter of the same year. The total value from the 34 funds amount to $1.60 billion, from $1.46 billion in the previous quarter, according to Insider Monkey data.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).
The Bottom Line
Caterpillar Inc. (NYSE:CAT) is in the spotlight today following an analyst upgrade from Goldman. Wall Street sees a buy opportunity with confidence in management strategy for growth and an impressive earnings per share upshot in the horizon. For a step away from the drumbeat of stocks trading, check out the top 10 biggest construction companies in the U.S.