Caterpillar Inc. : The stock is approaching a major resistance level

11/23/2020 | 11:18am EST

Eliot Reboul

long trade Target price hit

Entry price : 175.001$ | Target : 191$ | Stop-loss : 166.5$ | Potential : 9.14%

Caterpillar Inc. shares are trading close to a major technical resistance, which, if broken, could yield new upside potential and an increase in volatility. This scenario can be anticipated. Investors have an opportunity to buy the stock and target the $ 191.

Summary

• The company has solid fundamentals for a short-term investment strategy.

Strengths

• There is high visibility into the group's activities for the coming years. Outlooks on future revenues from analysts covering the equity remain similar. Such hardly dispersed estimates support highly predictable sales for the current and upcoming fiscal years.
• The stock is in a well-established, long-term rising trend above the technical support level at 127.46 USD

Weaknesses

• The stock is close to a major daily resistance at USD 173.19, which should be gotten rid of so as to gain new appreciation potential.
• According to Standard & Poor's' forecast, revenue growth prospects are expected to be very low for the next fiscal years.
• The company is in debt and has limited leeway for investment
• The group usually releases earnings worse than estimated.
• For the last twelve months, sales expectations have been significantly downgraded, which means that less important sales volumes are expected for the current fiscal year over the previous period.
• For the past year, analysts have significantly revised downwards their profit estimates.

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