Top Picks 2017: Caterpillar

01/17/2017 7:00 am EST

Focus: STOCKS

Jim Powell

Principal Analyst, Global Changes & Opportunities

If Congress approves the new president’s spending and tax proposals, stocks should get a second wind. If not, they will drop—probably abruptly, forecasts Jim Powell, editor of Global Changes & Opportunities Report.

Meanwhile, it would be difficult to find a company that’s better positioned than Caterpillar (CAT) to benefit from the increase in infrastructure spending that President-elect Trump is proposing.

The company’s specialized earth-moving and construction equipment is found throughout the world, from mines in remote New Guinea to building sites in downtown New York.

Wherever roads are being built, natural resources are being developed, or buildings are being erected, you will find Caterpillar -- my Top Pick for conservative investors for 2017.

Caterpillar is also an important supplier of generators, industrial gas turbines, and diesel-electric locomotives that the company markets worldwide. An internal finance operation makes it easy for its customers to buy the equipment they need.

Caterpillar has more going for it than rising equipment orders, although that alone should give the stock a prosperous future. Higher oil and commodity prices will also lead to improving sales. An expected increase in Chinese construction should be even more profitable.

CAT has already started to rise in price -- but I think it has a lot further to go. The current 3.27% yield is an added inducement to buy.

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