Skip to Content
US Videos

Caterpillar Well-Positioned Amid Infrastructure Boom

The undervalued, wide-moat firm presents an excellent investment opportunity today.


Scott Pope: As emerging economies become more urbanized and developed economies replace aging infrastructure, the demand for construction equipment continues to increase. We currently feel wide-moat Caterpillar is optimally positioned to benefit from this infrastructure boom and is significantly undervalued. In recent quarters, Caterpillar has done a remarkable job increasing its profitability. By reducing 25% of its overall manufacturing floor space and trimming headcount by approximately 14%, Caterpillar has emerged a leaner, stronger organization.

Our recent research suggests Caterpillar offers significant upside potential. While the North American construction segment is experiencing significant tailwinds, many of Caterpillar's business segments are well below their midcycle peaks. Currently, its resource industries segment is generating less than half of the revenue it was in 2012. Caterpillar's rail division has also been particularly depressed in recent years suggesting future revenue improvements are likely.

Scott Pope does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.