A little over a week ago, we profiled Caterpillar Inc. (NYSE:CAT) stock as a beneficiary to the newly-passed infrastructure bill. However, the immediate effects of those tailwinds have worn off, with CAT sporting a 3.2% deficit this week.
The shares' 200-day moving average kept a lid on the breakout last week. CAT is a far cry from its June 4 all-time high of $246.69, but thanks to its 11% year-to-date lead, is also a ways off its November 2020 annual low around $170.
From a fundamental point of view, Caterpillar stock has strong potential as a recovery play with a forward dividend of $4.44 with a dividend yield of 2.12%. CAT currently trades at a somewhat high price-earnings ratio of 22.22. However, Caterpillar stock's forward price-earnings ratio of 16.86 indicates a significant expected increase in earnings and represents a much better valuation for the construction company.
Additionally, CAT's revenues and net income are still down 12% and 16%, respectively, since fiscal 2018. This is despite growing Caterpillar's revenues and net income 16% and 72%, respectively, since fiscal 2020.