This company has been going strong for over 85 years and isn't going anywhere. They currently have hundreds of sites around the world, including Antarctica.
Despite market averages being at record highs, Caterpillar is trading in the low $80's compared to $116 in 2011. What might be the reason Caterpillar is moving in such a different direction as the market?
It certainly isn't because anything is wrong with the fundamentals of the company. It is still the same solid company that it has always been and is expected to have record earnings in 2014.
It is not because the company is overvalued. Caterpillar has a price/earnings ratio considerably below both its own average and that of the market in general.
I believe the reason for the stock being at a low is psychological. Crowd psychology is over reacting to current economic problems.
Lately the market averages have hit all time highs, but remember market averages are just that. It's not one size fits all. They are simply overall averages, which do not apply to all of the approximately 5,000 companies that are traded.
Throughout my career, I have invested in all types of markets and there have always been pockets of both undervalued and overvalued stocks.
A major advantage we have as long-term investors is that if the fundamentals of a good company hold up, crowd psychology usually changes to a more positive outlook.
No one knows how long it takes for a stock value to change, but you get an above average dividend while you are waiting for Caterpillar's stock to rise.
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