A Very Hungry Caterpillar

The machinery giant is churning out record profits despite a weak economy. Its stock is a buy.

You might expect a century-old manufacturer of heavy equipment to move slowly in a stagnant world economy. But Caterpillar (symbol CAT), the Peoria, Ill.–based maker of tractors and farm equipment, is no sluggard. Instead, Cat is sprinting ahead.

Not only did Cat recently report record profits and higher employment, it also expressed optimism about its prospects. “The world is facing economic challenges, and if it becomes necessary, we are prepared to act quickly, as we did in late 2008 and 2009 [to cut costs],” chief executive Doug Oberhelman said when the firm released second-quarter results. “The good news is, this doesn’t feel like 2008. Interest rates are low, central banks are prepared to inject more liquidity if needed, and housing is coming off lows, not a peak, and seems to be improving.”

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Kathy Kristof
Contributing Editor, Kiplinger's Personal Finance
Kristof, editor of SideHusl.com, is an award-winning financial journalist, who writes regularly for Kiplinger's Personal Finance and CBS MoneyWatch. She's the author of Investing 101, Taming the Tuition Tiger and Kathy Kristof's Complete Book of Dollars and Sense. But perhaps her biggest claim to fame is that she was once a Jeopardy question: Kathy Kristof replaced what famous personal finance columnist, who died in 1991? Answer: Sylvia Porter.