Analysis of Caterpillar share price for trading

Certain activity sectors such as building and construction in general are particularly well represented on the major stock markets. But the groups responsible for supplying these sectors with quality materials and equipment also represent a choice investment. This is why we will here examine the Caterpillar Group in detail with information and a historical analysis of its stock market price.  

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Our advice for trading Caterpillar share

Tip number 1

First, while some of the Group's targeted sectors are currently in recession, others are booming. This is particularly the case for the construction and mining sector in emerging countries. It goes without saying that the Caterpillar group has the necessary resources and a sufficient presence in these countries to position itself as the supplier of choice.

Tip number 2

Despite the fact that the Caterpillar Group faces increasing competition in certain specific sectors with large and more specialised companies, Caterpillar is making strategic acquisitions of companies to enable it to face them under the best conditions.

Tip number 3

Finally, new types of markets are also opening up and could open new doors for Caterpillar. This is particularly the case for green vehicles requiring more natural gas.

Tip number 4

Despite the fact that Caterpillar is able to outperform some of its competitors, new competitors are struggling to gain market share. This is the case, in particular, of the Stiff group, which has put a lot of emphasis on its development in China.

Tip number 5

As we have seen above, the group could continue to suffer the negative effects of the construction sector crisis in the United States and China as well as an increasingly high level of inflation.

Tip number 6

Finally, the group also depends a lot on the price of the necessary equipment but also on the political stability of the countries in which large farms of this type are located.

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About the Caterpillar group:

The American group Caterpillar is currently the international leader in the manufacturing and production of materials destined for the construction sector. Its activities can be divided into a variety of different sectors, the major activity being the sale of machines and motors but also including the provision of financial services albeit at less than 5%.

With around a hundred production sites around the world, Caterpillar works in the American market as well as in Asia Pacific, Europe, Africa and the Middle East.

 

The major competitors of Caterpillar:

The Caterpillar Group, although it operates in a highly specific activity sector, still has to face certain competition. Despite the opportunities offered by emerging countries and the acquisitions of competitive companies that enable the group to remain the leader in its sector, it is threatened by various competitors and setbacks due to policies implemented by different governments. This is why we offer you the opportunity here to learn about Caterpillar’s different competitors throughout the world. We recommend that you study these companies carefully, together with their financial reports and movements in their shareholdings and price before implementing your investment strategies. Here therefore are the major companies you should monitor:

  • BIA
  • O&K
  • Unit-Rig
  • P&H Mining

 

The major partners of Caterpillar:

In 2008 Caterpillar announced an agreement with Trimble for the creation of a collaborative company named VirtualSite Solutions, as well as a distribution agreement.

  • Caterpillar and the Ariel Corporation created a joint venture in 2012 to supply complete pressure pump solutions to global petrol and gas clients.
  • In 2013, Shell Canada and Caterpillar signed an agreement in order to test a new engine and fuel mixture notably composed of Liquefied Natural Gas (LNG) that could reduce operating costs and lead to a reduction in emissions from the mining of the tar sands in the north of Alberta.
  • In 2016 Redbird signed a partnership agreement with Caterpillar. To be more precise, it actually implemented two types of partnerships. One relative to technology as it worked with Caterpillar on the development of solutions that enabled the combination of machine data with data available from drone flights, and a sales/marketing partnership that enabled them to sell their product throughout all the countries of Europe, the Middle East and Africa.

 

Analysis of the rates of Caterpillar shares:

Quoted on the Euronext non Euro zone stock market, Caterpillar shares are also included in the calculation of the Dow Jones stock market index.

Historically, it can be seen that the price of Caterpillar shares has shown a strong stability, even during periods of crisis. It can therefore prove advantageous to trade in them over the long term.

 

Economical and financial history of the Caterpillar Company:

Here are some of the major events that have marked the financial and economic history of the Caterpillar Group over the last decade:

  • In 2006 Caterpillar reduced its workforce by 600.
  • In 2008, the Caterpillar manufactory became the unit experiencing the fastest growth with a turnover of over one billion dollars.
  • In 2009, after the 2008 crisis, Caterpillar restructured and reduced the workforce by 814 jobs at its Mossville factory and also announced the possible redundancy of 733 people in Isère.
  • In 2011 the group purchased Bucyrus International for 8.8 billion dollars.
  • In 2013, the group created 1,400 redundancies in Belgium.
  • In 2015 the company announced the loss of 4,000 jobs before the end of 2016. In the same year the group announced the closure of its Belgian factory.

 

Important stock market data relating to Caterpillar shares:

To conclude here is some basic but extremely important stock market information relating to Caterpillar Company shares and their position on the international stock markets.

  • In 2017 the total stock market capital of the Caterpillar Company attained U.S. $59,528.33 million.
  • The number of shares issued by the Caterpillar Company that are currently in circulation on the stock markets is around 18,358,089.
  • The Caterpillar share price is currently quoted on the section A of the Euronext Paris stock market in France.
  • The Caterpillar Group share price is also integrated in the French National stock market Index, the CAC 40.
  • The shareholdings of the Caterpillar Company comprise the following: 9.14% by the State Street Corporation, 6.39% by the Vanguard Group, 3.58% by the SFMAIC, 3.52% by the Capital World Investors, 3.46% by BlackRock, 2.78% by Capital Research Global Investors, 2.59% by the FMRC, 2.56% by the Wellington Management Company, 1.92% by the Bill and Melinda Gates Foundation and 1.78% by Harris Associates.

 

Some advice for effectively trading Caterpillar shares using CFDs:  

If you plan to invest in the share price of Caterpillar using CFDs we recommend that you follow this simple advice:

Firstly, it is imperative to know how to recognise the best moment for your investment basing your decision on fundamental data and analytical techniques. More specifically, ensure you check that any major event is not susceptible to change the direction of a strong trend that you have identified. In the case to the contrary, you can also benefit from this event and market expectations to take a strategic position taking into account the effects that this will have on the stock market share price of the group. Among the events that should be closely monitored are the following:

  • The publication of the group’s financial accounts that you will be able to access each quarter or annually.
  • The dividend payment calendar.
  • Mergers, acquisitions or disposals by the group.
  • Official announcements by the group concerning economic, financial or strategic current events.
  • Finally, new markets, redundancies or production sites.

Of course, you should always check the chart trend before taking any decisions as the effects of fundamental data are generally well anticipated by the markets. This basically means that you need to determine here if the market forecast is well founded, exaggerated or, on the contrary, too low.

We recommend that you use a reasonable leverage effect ratio to ensure you limit the risk of losing your capital due to an ill-advised decision. It is actually better to take several simultaneous or successive positions rather than one single risky position. 

It is also important not to forget that CFDs offer you the opportunity of trading on the rise as well as on the fall in an asset price.

 

The advantages and strong points of Caterpillar shares as a stock market asset:

Any self respecting investor that wishes to implement an investment strategy on the stock markets over the medium or long term will tell you that it is imperative that you really know the company of the asset upon which you plan to speculate before you take position. In fact, by analysing the strengths and weaknesses of the Caterpillar Company you will be far more capable of anticipating future movements in its share price and therefore in a position to further improve your strategies. This is what we offer you here by commencing with a detailed summary of this company’s advantages and strong points. 

Firstly, the Caterpillar Group offers the advantage of being one of the largest companies in its activity sector worldwide. This has notably been possible due to the quality and breadth of its network throughout various countries on all the continents.

Caterpillar has also managed to ensure a stable income by investing in the quality of its after sales service which represents an ideal balanced level of efficacy throughout the world. Due to this the company has shown it is capable of positioning itself in a highly effective manner to face the competition and sell its products in all the respective markets. 

We also appreciate the ability of the Caterpillar Group to diversify its range of products. In fact, in order to consistently respond to the different requirements of its clients it is always developing new complementary or additional products and holds many significant patents.   

The Caterpillar Group can also count upon its strong and effective expansion strategy which is primarily based upon well thought out acquisition operations. This was notably the case with the recent acquisition of certain companies such as Bucyrus, EMD and MWM which have rapidly become highly profitable subsidiaries for the group and provided new benefits.

Finally, the Caterpillar Group can also count upon its considerable work force which constitutes over 150,000 employees throughout the world to guarantee its clients a rapid response to their requirements and meet production objectives under the best conditions.

 

The disadvantages and weak points of the Caterpillar shares as a stock market asset:

Now that you have had the opportunity to learn about the strengths and advantages of Caterpillar shares you are probably eager to take a buy position on this stock market asset. However, before doing so you should also take the time to learn about the weak points and disadvantages of the Caterpillar Group that could negatively influence the profits of this company thereby rendering its shares less appealing for investors which in turn would lead to a fall in its price on the charts.

The first disadvantage of Caterpillar shares remains this group’s strong exposure to the European market. In fact, the sales achieved in Europe by Caterpillar represent no less than 25% of the group’s global income. Despite a highly judicious and well managed expansion programme the group is still directly exposed to the risk of a decrease in its activity and income in the case of an economic crisis in Europe, the sales throughout the rest of the world would not be enough to compensate for such a loss. This problem is even more of a threat as Europe has not succeeded in fully re-launching its growth.    

Although the European market is of course a source of anxiety for the Caterpillar Group other markets are also undergoing a current crisis. We know for example that sales in Africa and the Middle East are currently decreasing overall and the state of the markets do not permit us to foresee a recovery in the near future.  We can therefore expect to see a fall in major activity during the coming years with supplementary losses that will directly impact the group’s profitability. 

Finally, the American market is also not safe from the possibility of a major loss in sales for the Caterpillar Group. The company sells a major part of its construction machinery to the real estate and construction sectors. As these markets are currently undergoing major crises this contributes to a decrease in orders for such items.

 

How to complete a comprehensive fundamental analysis of the Caterpillar share price

Primarily, concerning the opportunities that are offered by the Caterpillar Company we could monitor the following points:  

  • Firstly, although certain sectors of activity targeted by the group are currently experiencing a recession, others are in full growth. This is notably the case with the construction sector and the mining industry in emerging countries. It goes without saying that the Caterpillar Group possesses the means necessary and its existing implementation in these countries to position itself as a first class supplier with new clients and thereby gain juicy new contracts and a larger market share.  
  • Despite the fact that the Caterpillar Group is confronted by increasingly strong competition in certain specific areas with large specialised companies, Caterpillar has proceeded with strategic acquisitions of companies that enable it to challenge them under the best conditions. This is notably the case with the recent acquisition of the Bucyrus Company which provided the group with a wider range of products aimed at the mining sector. Due to this acquisition Caterpillar has managed to rise to the top of the market easily overtaking its rival Joy Global.    
  • Finally, new types of markets are also currently opening up and can open new doors to the Caterpillar Company. This is notably the case with the green vehicles sector that uses natural gas which is increasing in production which should have an indirect influence on the sales of the group in this sector.  

Of course, the Caterpillar Group also needs to overcome certain threats during the coming years such as the following elements which should be monitored:

  • Firstly, and although Caterpillar has achieved in overtaking several of its competitors, new competitors are fighting to take its market share. This is notably the case with the Stiff Group which has heavily invested in its development in China, one of the most popular markets in this activity sector.    
  • As we examined above, the group may continue to be subject to the negative effects of the crisis in the construction sectors in the United States and China as well as an increasing inflation rate and therefore a fall in sales in this activity sector.
  • Finally, the group also depends greatly on the economic health of the mining industry which itself depends on various factors including the price of the necessary materials as well as the political stability of the countries where the major activities of this sector are to be found.

Although all these points will assist you in implementing your investment strategy on the rate of Caterpillar shares you should not forget to complete a comprehensive technical analysis.

How to speculate on Caterpillar shares?

Read useful and complete information relating to Caterpillar shares and trade in their price in real time after completing a full analysis using our practical and extensive advice. If you would like to trade directly in Caterpillar shares then this is now possible for an individual investor by registering with a CFD broker online.

Trade Caterpillar shares!
75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
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