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Caterpillar’s Earnings “Bulldozed” Expectations

After disappointment last quarter, Caterpillar exceeded estimates with an earnings report that showed profit rose 44% in the third quarter. Revenue rose 41% to a company record, and the outlook for 2012 called for 10-20% further revenue growth. And the company’s order backlog is at an all-time high.

The world’s largest construction and mining equipment maker added 4,800 jobs during the third quarter…and 2,000 of those were in the U.S. CEO Doug Oberhelman is “optimistic about demand for our products” and focused on “long-term growth opportunities”. China has been a major driver of growth for Caterpillar, and the company expects the Chinese economy to grow 9% next year.

And the stock has spent the month of October bouncing back from oversold levels (shares have risen 28% over the past month). The stock signaled a long-term sell in August…and late last week an intermediate-term buy signal was triggered (but still shy of a long-term buy). But a note of caution: last week’s action left shares a little too hot, so I would watch for a bit of a correction in the near-term.


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