With a market capitalization of $188B and 2023 revenues of $67B, Caterpillar Inc. (CAT) is the world’s leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives.In the new era of electric vehicles (EVs) and sustainable energy, mining companies are emerging as the new oil wells, driven by skyrocketing global demand for industrial metals. This demand is essential for the high-tech world we live in and for the continued transition to electric vehicles. Such trends have created substantial opportunities for financial advisors looking to integrate mining and metals into their client portfolios.For risk-averse investors who still want to participate in the burgeoning demand for these new-age miners, shares of CAT have become an appealing option. As a member of the Dow 30 and S&P 100, Caterpillar is well-positioned to capitalize on the growth in the new economy, particularly as demand for mining equipment is set to increase directly.Fundamentals aside, the technical picture for CAT is pointing toward significant growth. The SIA relative strength position chart indicates a build of strength over the past two and a half years. Additionally, the SIA S&P 100 Matrix Report places Caterpillar at position #13, highlighting its strong market presence. Currently, shares are up 12.36% over the past month and 32.84% year to date. Impressively, shares carry a perfect SMAX score of 10 out of 10, underscoring its relative strength across all asset classes, not just within its peer group in the S&P 100.
Turning to the Point and Figure chart, scaled at 2%, we observe that CAT is moving toward new highs and breaking out with a bullish spread double top formation. The three grey bars added to the chart highlight periods of resistance and consolidation that occur roughly every couple of years, allowing the stock to digest significant gains. Currently, grey bar #3 appears to have been penetrated, indicating that shares are moving higher once again.As CAT approaches the psychological $400 level, it’s important to note that this does not align with other established resistance levels based on our vertical counts. Instead, the more relevant resistance appears to align with the $440.56 level, with further resistance identified at $486.41.On the other hand, support is solid around the top of the highlighted grey box level at $376. The Point and Figure analysis allows for more specificity, indicating a support level at $354.32, with additional support stacking up at $314.63 should a material correction occur.
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