Caterpillar in 2012: Stuck in Neutral

The year is nearing its end, and now is a good time to look at what happened throughout the year to the stocks you follow. If you know the important things a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it deserves a spot in your portfolio.

Today, I'll look at Caterpillar (NYSE: CAT  ) . As an important member of the Dow Jones Industrials (DJINDICES: ^DJI  ) because of its relatively high share price, the construction equipment giant has benefited in the past few years from the booming global economy. More recently, though, slowdowns around the world have pushed the stock into neutral. Below, you'll find more on what moved shares of Caterpillar in 2012.

Stats on Caterpillar

Year-to-Date Stock Return

(1.9%)

Market Cap

$56.9 billion

Total Revenue, Trailing 12 Months

$67 billion

Net Income, Trailing 12 Months

$6.53 billion

1-Year Revenue Growth

20.4%

1-Year Earnings Growth

50.2%

Dividend Yield

2.4%

CAPS Rating

****

Source: S&P Capital IQ.

What happened to Caterpillar this year?
Caterpillar has taken advantage of global expansion to become a world-renowned powerhouse in construction and mining equipment. A quarter of its revenue now comes from the fast-growing Asia-Pacific region, even though just a small portion of it currently comes from China. That leaves the company with plenty of additional growth potential, even though both Caterpillar and farm equipment maker John Deere (NYSE: DE  ) are seeing serious competition from Chinese companies and Japan's Komatsu.

Caterpillar's third-quarter results left investors seriously scared about the company's future. Although the construction giant produced a record quarter, it cut its full-year guidance for 2012 and gave a cautious outlook for 2013, saying inventory reductions among dealers were holding back sales. Having already given negative guidance for 2015 a month earlier, Caterpillar hasn't inspired long-term investors to be very optimistic.

Interestingly, despite the negative impact the slow global economy has had on the industry, General Electric (NYSE: GE  ) is making its own entry into the space. With some seeing Joy Global (NYSE: JOY  ) as a potential GE takeover candidate, industrial giant GE has the muscle to make life difficult for Caterpillar.

After declining from much higher levels in the middle of the year, Caterpillar looks like a bargain, even with slightly declining earnings potential. If it can tread water until the next big global expansion, then it'll be in prime position to take full advantage when the time comes.

Learn more
Caterpillar hasn't had the best 2012, but what will 2013 bring? Find out in the Fool's premium research report on the stock, which tells you whether Caterpillar is a buy through an in-depth analysis of its strengths and weaknesses. Just click here to access it now.

Click here to add Caterpillar to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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