The Best and Worst Dow Stocks

27. Caterpillar Inc. (NYSE:CAT)

Number of Hedge Fund Holders: 62

Short Interest as of Apr 30, 2025: 1.66%

Caterpillar Inc. is a manufacturer and seller of mining and construction equipment, industrial gas turbines, off-highway diesel and natural gas engines, and diesel-electric locomotives.

Citing concerns over economic risks from increasing macro uncertainty and recent tariffs, UBS analyst Steven Fisher downgraded some major building materials and machinery stocks recently, including CAT. He downgraded the company from Neutral to Sell and mentioned that tariffs might lead to margin compression by potentially increasing costs and reducing demand.

The analyst highlighted the risk by saying:

“We think there’s more earnings downside for machinery companies related to macroeconomic headwinds that is not yet priced in, despite the pullbacks in the stocks to date.”

As per the guidance, the management anticipates a slight decline in revenues and sales in 2025. Tariffs could add as much as $350 million to the company’s costs. CAT is known as an industry leader in profitability, with EBITDA margins maintaining around 15% even during downturns. The management has already stated in the Q1 earnings call that it is considering measures to reduce the impact of tariffs and maintain profitability.