Why Caterpillar's Stock Is Like The 'Unloved Stepchild' Of This Market

Goldman Sachs analysts turned bullish on Caterpillar Inc. (NYSE: CAT) this week in a decision Chantico Global CEO Gina Sanchez and Ascent Wealth Partners managing director Todd Gordon can’t get behind.

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Sanchez: The ‘Unloved Stepchild’ Of Stocks

Goldman’s bullish thesis amounts to the firm saying Caterpillar’s stock is “really, really, really, really cheap” and buying the stock is merely a “value story,” Sanchez said on a CNBC. But even if the stock is attractive from a valuation perspective, the company is overexposed to troubled sectors. Call it the “unloved stepchild of this stock market.”

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The oil and mining sectors are struggling to keep up with other stock sectors and looking at Caterpillar’s stock one thing is clear: the company is most exposed to oil and mining.

“If you were to buy into this Goldman call, you have to believe that something else is going to catalyze this stock,” she said. “We’re not seeing that in the mining sector, we’re not seeing that in the underlying commodities prices, and we’re certainly not seeing it in energy or oil demand.”

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Gordon: ‘No Real Progress’ In The Chart

Caterpillar’s stock has not only underperformed the broader market, but it’s underperforming against the Industrial Select Sector SPDR Fund (NYSE: XLI), Gordon said. As such, there are better opportunities for investors to gain exposure to the sector.

“For now, this is dead money,” Gordon said.

Caterpillar’s stock traded lower by 2% to $137 per share at time of publication.

Latest Ratings for CAT

Date Firm Action From To
Feb 2020 Upgrades Neutral Buy
Feb 2020 Maintains Buy
Feb 2020 Maintains Sector Perform

View More Analyst Ratings for CAT

View the Latest Analyst Ratings