Caterpillar Inc. (CAT): A Bull Case Theory

We came across a bullish thesis on Caterpillar Inc. on Chip Stock Investor’s YouTube channel. In this article, we will summarize the bulls’ thesis on CAT. Caterpillar Inc.’s share was trading at $636.53 as of January 13th. CAT’s trailing and forward P/E were 32.35 and 28.49, respectively according to Yahoo Finance.

Caterpillar, widely recognized for its construction and mining equipment, is emerging as a key player in the energy sector, particularly through its role in powering AI data centers. While its construction and resource industries segments have seen muted growth in recent years, the company’s energy and transportation segment has become the primary driver of revenue and future growth, fueled by rising demand for onsite power solutions.

Caterpillar’s order backlog has surged nearly $10 billion this year, largely from data center operators seeking diesel and natural gas generators, as traditional energy grids struggle to keep pace with skyrocketing electricity needs. The company also complements these solutions with lithium-ion battery storage, analytics, and connected technology, partnering with major firms like Nvidia, Microsoft, and Snowflake to optimize performance.

Despite relatively flat revenue, Caterpillar has delivered strong profitability, with a decade-long EPS CAGR of 17% and free cash flow growth of 11%, reflecting margin expansion and efficient capital deployment. Looking ahead, the company expects top-line growth of at least 5% CAGR through 2030, targeting $100 billion in revenue and a 25% operating margin, driven by onsite energy, software, and services.

Compared with peers like GE Vernova, Caterpillar’s vertically integrated approach positions it uniquely in the specialty energy market. With a strong backlog, secular tailwinds from data center expansion, and robust cash generation, Caterpillar offers a compelling investment opportunity for those seeking exposure to the growing energy infrastructure supporting the digital economy.

Previously, we covered a bullish thesis on Vulcan Materials Company (VMC) by LongTermValue Research in April 2025, which highlighted its dominance in construction materials, local monopolies across 23 states, and strong secular tailwinds from federal infrastructure spending. VMC has appreciated approximately 29.54% since our coverage as VMC’s pricing power and monopoly positioning supported earnings. Caterpillar Inc. shares a similar industry focus but emphasizes growth from energy and transportation, driven by onsite power solutions and AI data center demand.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.