Caterpillar Inc. : Buy on the lower bound

05/02/2012 | 10:36am Opinion : Bullish above 99.7 USD Target price : 109.2 USD Stop loss: 96 USD

NYSE Construction / Agricultural Machinery

The world’s leading producer of mining construction and operation equipment, Caterpillar, has released for the first quarter a revenue of $16 billion, up 23% and a net income of $1.6 billion, up 29%.

Moreover, the group has revised upwards its forecast for annual profit to $9.50 per share, against $9.25 previously. It kept its forecast for sales, between $68 and $70 billion. The order book continued to increase in the first quarter at $ 30.7 billion. Besides, the management announced to face a slowdown in China and Brazil which curb their expansion to master inflation.

Technically, Caterpillar’s stock has failed to sustain bullish impetus. The share has declined and evolve now in a trading range bounded by USD 99.7/109.2. Currently, the security is near the lower bound, represented by the USD 99.7 mid-term support, and could head back towards the upper bound i nthe next sessions.

Thus, investors could take a buy position on the lower bound to target the upper bound at USD 109.2. A stop-loss will be fixed at USD 95.5, below a small gap at USD 96.

Alexandre Nutte Copyright (c) 2013 4-Traders.com

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