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Top 10 Forever Stocks | a series brought to you by Wyatt Investment Research ----------------------------------------------------------------------------------------- Forever Stock No. 3 is Caterpillar (NYSE: CAT). For this report, I researched a range of industries to bring you stocks that should hold up regardless of market conditions. To keep your portfolio diversified, I chose companies across several unrelated industries, including energy, healthcare, financials, technology, industrial goods and consumer staples. What’s more, several pay healthy dividends, a must in today’s low-interest-rate environment. These stocks are built to last, meaning you should hold onto them for the long haul. I’m sure you’ll be pleased with their performance for many years to come. -----------------------------------------------------------------------------------------
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Caterpillar (NYSE:CAT)
A Stock That Could Turn Into a Butterfly
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Source: Equipment World
We think of Caterpillar (NYSE:CAT) as a distinctly American company. After all, what’s more American than riding a tractor or moving some dirt around in a bulldozer?
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The company has been selling its signature tractors out of California since 1925. It eventually expanded into construction vehicles, and these days the company’s familiar “CAT” symbol can be seen at almost every construction site across the country.
But Caterpillar’s growing presence in emerging markets such as Brazil, China and India should sustain the company for years to come. Sales in China rose by 20% in 2013 despite a slowdown in its economy.
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Caterpillar is already the world’s largest manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. More than half the company’s sales are outside the U.S., as it serves more than 180 countries worldwide.
WORLD’S LARGEST MANUFACTURER
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Now, with emerging markets such as China and India rapidly expanding their infrastructure, the need for Caterpillar equipment is on the upswing.
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While weak demand for equipment from the mining industry has increased cost-cutting efforts into 2014 and beyond, the $68.7 billion company expects its industry-dominating construction business to make up for some losses there.
$ 68.7 BILLION COMPANY
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the company has increased its dividends for 20 straight years and seen its shares quadruple over the past decade. The current dividend is $2.24 per share, up from $0.78 per share 10 years ago. Caterpillar did $56 billion in revenue over the past year, with net income nearly $4 billion. So look for that dividend growth to continue.
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It’s no wonder,
As mentioned earlier, early on the company built its reputation on selling farm equipment. Given that U.S. farms produced record profits in 2011 and that the world’s population recently broke the seven-billion mark, farm equipment is a good place to do business.
WORLD’S MOST SUCCESFUL INVESTOR
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7 BILLION MOUTHS TO FEED
Obviously, people need food. And more people means more demand for food and the farms and machinery that produce it.
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The diesel and natural gas side of Caterpillar’s business fits nicely with both its construction and farming equipment segments. Much of that machinery requires fuel, which Caterpillar happily provides.
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Mining, forestry and even retail and wholesale financing are other areas of Caterpillar’s business. Such a wide array gives the company enough flexibility to generate diverse income streams. The company should be able to weather economic downturns in various regions and business sectors.
According to consensus analyst expectations, Caterpillar is primed to grow its profits 23% annually for the next five years. With the stock trading at 17 times earnings at the moment, that’s a fairly sizable discount.
DIVERSE INCOME STREAMS
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But Caterpillar isn’t a stock you would want to sell in five years. Its long-term prospects are too enticing. More roads and bridges must be built, more oil and coal must be mined, and more crops will need seeding. All those functions require the use of heavy machinery that forms the core of Caterpillar’s business.
With nearly a century of growth under its belt and a name recognized around the world, Caterpillar is a stock worth buying now and holding onto for many years. Who know? In 30 or 40 years, it could turn into a butterfly.
A LONG-TERM OPPORTUNITY
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Ready for more?
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