Back up your dump truck from stock Caterpillar (cat), says Steven Folkman, an analyst at Jefferies.
“The recent turmoil in Eastern Europe is fundamentally reshaping global commodity markets, structurally driving up prices and after years adding capacity for underinvestment and supply diversification will be essential in both the mining and oil and gas sectors, although new projects will take time. “Strong hedging for commodities and general inflation,” Folkman said in a new note on Tuesday.
Folkman upgraded his Caterpillar rating to Buy from Hold. The analyst sees a fair value of $260 per share, about 22% more than current levels.
Folkman added, “The company was a strong hedge in the hyperinflationary period of the 1970s. At the height of the last cycle, two-thirds of Caterpillar’s profits came entirely from mining, oil and gas and related activities, versus about 40% today. Mining specifically, remains well below levels Previous peak, and we believe that new capacity will need to be more energy efficient and more automated to continue to meet ESG’s targets. All in all, we see earnings strength of around $25 per share or higher as the commodity infrastructure is rebuild.”
Heavy equipment maker shares soared 8% to $213 per session. Stock was among tIn the 10 most popular indicators on the Yahoo Finance platform.
Caterpillar stock is now up 3.2% in 2022, outpacing the 12% decline for the S&P 500.
In Volkman’s view, the Russian-Ukrainian war set prices for almost all commodities on fire.
Wheat Closed in Chicago in The highest price ever on Monday. Standard corn And the soybean Futures contracts are up 26% this year. The price of Brent crude rose for a short period to 139 dollars a barrel on Sunday evening.
And of course it was trading nickel Suspended today at $100,000 per ton.
“Remember, it was the bread riots that started the Arab Spring, and the bread riots that started the French Revolution,” said Sal Gilberty. Yahoo Finance Live.
Gilberty is CEO of thiochromethe largest source of US exchange-traded funds focusing solely on agricultural funds.
“It is a scriptural event when wheat stocks are low. You will not see a global food shortage. Unfortunately, what you will see globally is that billions of people may not be able to buy food.”
It looks like a lush background for Caterpillar.
Yahoo Finance Julie Heyman Contribute to this story.
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