Caterpillar Inc. (CAT) is on track to increase its stock price to around $110, with a low-end guide of $7 per share for 2013, as the company pulls through the weak mining segment and increases production in its construction equipment, says Brian K. Langenberg, Principal and Founder of Langenberg & Company, LLC.
“Caterpillar (CAT) looks interesting over the next two to three quarters. Last year they overbuilt excavators, particularly in China, which rolled over in mid-2012. Mining has also gotten whacked, and we’ve seen multiple guidance cuts. But the worst is behind them. The stock trades at $90 to $91, and the low-end guide for 2013 is $7 per share,” Langenberg said.
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Langenberg expects CAT‘s construction equipment production to increase in late 2Q or early 3Q, and though mining will remain weak, he predicts CAT‘s stock price will rise significantly from current levels.
“Construction equipment, which is more important to the company than mining, production is going to increase in late 2Q or early 3Q and against easier comparisons. Mining, given strong capacity utilization, may remain weak, but won’t kill them. The stock can hit $100 easily, maybe even $110,” Langenberg said.
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