For a number of reasons, the construction, mining equipment, and energy and transportation equipment company Caterpillar (NYSE: CAT) is well set for a recovery in 2021. Many investors will be tempted to buy into the stock on that basis, but the key question is whether the stock is a buy or not. Let’s take a look at what’s going in 2021 and try to shed some light on the answer.
First, retail sales of Caterpillar’s equipment have probably bottomed and look set to turn up in 2021. For reference, Caterpillar mainly sells through independent retailers who manage their own affairs — I’ll come to this point later — and a look at their rolling three-month retail sales suggests that a return to growth will occur soon.