Caterpillar Inc. (CAT): A Bull Case Theory

We came across a bullish thesis on Caterpillar Inc. (CAT) on Investing Lawyer’s Substack. In this article, we will summarize the bulls’ thesis on CAT. Caterpillar Inc. (CAT)’s share was trading at $359.80 as of 18^th June. CAT’s trailing and forward P/E were 17.55 and 18.94 respectively according to Yahoo Finance.

Caterpillar Inc. (CAT), a dominant force in construction and mining equipment, stands out as a reliable investment with a strong dividend track record and global growth potential. As a Dividend Aristocrat with 32 consecutive years of dividend increases, Caterpillar reflects a deep-rooted commitment to shareholder returns while maintaining ample room for future growth, evidenced by its modest 25.58% payout ratio.

Despite a modest current yield of 1.61%, the company complements dividends with consistent share repurchases and disciplined capital reinvestment, striking a healthy financial balance. Caterpillar’s stock performance has been persistently bullish, trading above both its 50-day and 200-day moving averages for years, signalling market confidence and resilience, even through periods of volatility, such as the sharp tariff-related dip that swiftly rebounded with a 20% gain.

Its diversified global footprint positions the company to benefit from rising infrastructure investment worldwide. Notably, CAT could see a major boost from its likely role in post-war reconstruction in Ukraine, where its scale and expertise in heavy machinery make it a natural choice. This potential catalyst adds a speculative but credible upside to an already solid long-term investment.

With global demand for infrastructure equipment expected to rise and geopolitical developments possibly offering additional tailwinds, Caterpillar presents a compelling case for both income and capital appreciation. Its combination of operational strength, consistent dividend growth, and strategic global exposure makes it a top pick for investors seeking stability with upside optionality in the industrial sector.

Previously, we covered a standout bullish thesis on McCormick & Company (MKC) by the same author in February 2025, which highlighted the company’s defensive qualities, strong brand portfolio, and consistent dividend growth as key pillars of long-term stability. The company’s stock price has depreciated by approximately 10% since our coverage. This is because the thesis hasn’t played out yet due to ongoing technical weaknesses. The thesis still stands as McCormick’s fundamentals and dividend resilience remain intact. Investing Lawyer shares a similar methodology in their thesis on Caterpillar (CAT) but emphasizes capital appreciation potential from cyclical tailwinds and geopolitical catalysts.

Caterpillar Inc. (CAT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database,62 hedge fund portfolios held CAT at the end of the first quarter which was 62 in the previous quarter. While we acknowledge the risk and potential of CAT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None.