Caterpillar (CAT) shares have fallen about 7% in the past month, as concerns about global growth have scared investors off. But the dip opens up a nice opportunity for investors, as CAT is now
“one of the cheapest names in our coverage relative to its historic valuation,” according to Bank of America/Merill Lynch analyst Andrew Obin.
“In our view, a low multiple reflects a lot of macro-economic uncertainty. However, we remain comfortable with our upbeat estimates, as our channel checks, including first quarter C.E. dealer survey (first quarterÂ Survey), visit to CATÂs largest N.A. facilities (Global offense) and recent construction meetings in China, indicate ongoing strength in N.A., stabilizing Europe & Asia, and better-than-expected progress in execution turnaround. We also think that investorsÂ expectations on China in 2012 are too cautious, and improved sentiment with better economic data out of China would be a positive catalyst for CATÂs valuation.”
Obin, who upgraded the shares to Buy, sees them rising to $135. They were up 0.8% today to $106.75.