Benzinga - If you're a stock investor, chances are you've been keeping an eye on Caterpillar Inc. (NYSE: CAT) lately. This company has been performing strongly in the market, with record highs achieved recently. But can this bullish rally be sustained? Will the stock keep climbing and generate great returns, or will reality set in soon? Could the soaring stock price trigger fear among investors and lead to panic selling? In this blog post, we'll analyze CAT to determine if it will continue to reach new all-time highs or suffer an inevitable decline. Keep reading to find out!
CAT had a promising start to the new year, with its quarterly sales rising 20% in January 2023. This can be attributed to continued demand for its construction and mining equipment, as well as diesel and natural gas engines. Despite the current global economic slowdown, CAT has managed to maintain growing sales figures thanks to its worldwide presence and diversified product range. Strong consumer demand, despite higher manufacturing costs and the need to raise prices, enabled the company to post a profitable quarter without experiencing any decline in sales. Its strong brand presence, which stands for quality and reliability, sets its products apart from the competition.
While fundamental news can offer glimpses of what could happen in the future, whether positive or negative, technical analysis is a more reliable tool for making investment decisions today. So, let's take a closer look at it. Technical analysis can be critical to understanding the current and near-term future of a stock's price, and help us identify upcoming opportunities.
Looking at the monthly timeframe for CAT, we can see that after a 42% drop due to COVID-19, the stock price surged in June 2021 to reach an all-time high of 181% above its lowest point. However, the price then fell further until September 2022, when it found some stability at $160.
Little did shareholders know that their losses would soon be compensated when the stock price reached new all-time highs just four months later! Sales skyrocketed alongside soaring share prices, much to the delight of long-term investors who had held on during the turbulent times.
However, this stock has a history of setting new all-time highs, followed by sharp, sudden declines, and then moving sideways for months. It's not for the faint-hearted, and both patience and discipline are crucial for holding this investment, along with nerves of steel. Despite the challenges it has faced, CAT is doing well overall. Let's hope this trend continues throughout the rest of 2023! If the bullish trend becomes smoother and less volatile, then it could move higher up on our watchlist of opportunities.
After the closing bell on Friday, February 24, the stock closed at $236.17, trading down by 0.75%
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