Our latest big position that we have taken is Caterpillar (CAT). We believe Caterpillar has a lot of upside in the short term. Three main reasons we believe that $CAT will continue to rise are:
- The Trump Trade: The first reason is the one everyone is talking about, the "Trump" trade. President Trump has promised has promised massive infrastructure spending. This is what caused the initial rally in the stock. Construction makes up 23% of Caterpillar's stock value.
- Rising Commodity Prices: One of the biggest revenue contributions to Caterpillar is its sales to mining and energy companies. Caterpillar went through revenue slumps because the demand for these was low and oil prices crashed. With rising oil prices as well as commodity prices looking as if they bottomed, there is tremendous opportunity for Caterpillar
- Old Machinery: We believe that there will be more demand for Caterpillar's products because of the life cycle of industrial machines. We believe a lot of companies will be replacing their old machines which will boost Caterpillar's revenue.
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