Is Caterpillar the Best Industrials Stock to Buy Right Now?

The Motley Fool · 1d ago

Key Points

  • Caterpillar's stock has risen more than 70% in the past year.

  • The company's backlog has grown to a record $72 billion.

The construction and heavy machinery company Caterpillar (NYSE: CAT) recently delivered one of its strongest quarters in history. A beneficiary of the artificial intelligence (AI) build-out, Caterpillar could potentially be the best industrials stock in the market right now.

Caterpillar's revenue in the second quarter of 2026 increased 24% to $20.5 billion from the previous year. The company's backlog is what really makes Caterpillar one of the best, if not the best, industrials stocks to buy right now.

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Caterpillar's company logo on a yellow backdrop.

Image source: The Motley Fool.

The pipeline is now a record $72 billion. That's a $35 billion increase in just one year. Caterpillar's profit per share reached an astounding $7.77 in this latest quarterly report.

AI-related demand is driving those numbers and reflects a real shift in Caterpillar's core business. The AI industry is providing multiyear revenue visibility and reducing the company's dependence on the traditional construction cycle.

Caterpillar's growth trajectory looks strong, and analysts largely agree that the stock has plenty of room left to run, with an average price target of $975. Caterpillar is currently trading around $800 per share.

All this good news, however, has made Caterpillar stock more expensive. The company's trailing P/E ratio is above 35 now, which is far higher than industry averages and the company's historical average. Ultimately, the valuation is justified by the company's multiyear demand and the shift away from traditional cyclicality.

Caterpillar is going to be difficult to beat in the coming years and is indeed one of the best industrial stocks to buy right now.

Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Caterpillar. The Motley Fool has a disclosure policy.