CAT Price Movement

17 Apr 2021

Based on the chart, we see there is a support level of $227 and a resistance of $238. The Bollinger Band (45D) suggests that the price is about drop being that it is above the midline, pushing the upper band. Furthermore, Andrew’s Pitchfork is yet another confirmation of a falling price. Some other key indicators are the RSI, Stochastic Oscillator, and MACD, which are all signaling a sell off in the near term. Below are the numerical values for those. Also, look at the value. There is a depletion of customer sentiment and buying so the price will continue to drop to the support range.

What I foresee happening is a price drop to around $225 to $227, which will require entry confirmation to maximize profits. Furthermore, I foresee the long-term value of this firm to be $284 based on both fundamental values, historical chart trends, and enterprise value. Keep an eye on their earning as well. Based on what they reported last earnings call, they were above 2.12 but had to make adjustments and it was standardized at 1.42, falling short but their price still surged. I foresee this happening again. They are expected at 1.94 but I believe it will be 2 based on what they are doing at the moment. Again, I see the price dropping to around $225 from most recent data then increasing to $245-250 (8.88% to 10%) but ultimately hitting $284 for long term investors.

Here are the fundamental and technical data highlights:
- Sector: Industrials
- Industry: Machinery
- Market Cap: 127.25B
- Volume: 1.61M
- Revenue Growth Rate (Avg): 11.5%
- Net Income Growth Rate (Avg): 7%
- Cash-On-Hand: 8.8B
- 1-YR Returns: 115%
- EV: 155M -> Puts (PT) price target at ~$284 – intrinsically)
- ROE: ~22%
- Altman Z-Score: 2.3
- Bollinger Band (30) in contraction with price accumulation
- RSI: 62, minor sell signal
- Oscillator: 66, slightly overbought, confirming sell-off soon
- Andrew’s Pitchfork: Lower band broken
- MACD: Sell off with decreased volume

News around CAT:
- Energy & transportation segment back online and fully operational according to February 10K Annual Report
- Discontinued EIP shares repurchase plan 2nd half of 2020 but continued in 2021 Q1
- Brought in Gerald Johnson, Executive VP of Global Manufacturing of GM on March 1 – to target automotive production
- Energy include oil and natural gas

According to (EIA) U.S Energy Information Agency, WTI crude oil is at $63.46 per barrel, over doubled from last yr. Natural gas is at $2.658 MMBtu, over doubled from last year. Oil & natural gas inventories are down 11.2M barrels from a year earlier and 242 bcf from a year earlier. Current = 492M barrels and 1,845 Bcf. This means that demand is high and with continuation of operations and CAT being industry leader with a large volume of government contracts, they are going to see a large spike in revenue with major increases in overall stock value.

Happy Investing!