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Caterpillar (CAT) Expands In North Carolina As Investors Ask If The Stock Is A Bargain

Simply Wall St · 2d ago

Caterpillar (CAT) is back in focus after committing about US$1b to expand its Cat Compact manufacturing footprint in North Carolina, including a new Sanford facility aimed at meeting rising compact equipment demand.

Caterpillar’s recent expansion news comes after a choppy stretch for the stock, with the share price falling about 6% over the past week and 10% over the last month. Despite this pullback, the stock still shows a 21.2% year-to-date share price gain and a 39.1% one-year total shareholder return, which indicates that longer term momentum remains intact even as near term enthusiasm cools.

Scan beyond Caterpillar to see which construction and infrastructure players are drawing similar interest with our hand picked 42 power grid technology and infrastructure stocks

The pullback has given back a chunk of Caterpillar’s recent run, just as it commits fresh capital to growth. Does that combination justify stepping in now, or does patience still look cheaper?

Most Popular Narrative: 24% Undervalued

Caterpillar’s most followed narrative pegs fair value at about $951 per share, compared with a last close of $725.24. This frames the recent pullback as a gap between price and what long term cash flows could justify if the thesis plays out.

The plan to increase large engine capacity to three times 2024 levels by 2030 and expand turbine capacity to 2.5 times 2024 levels, together with the restart of the 10 megawatt medium speed gas engine targeting about 1.5 gigawatts of shipments from Q4 2026, positions Caterpillar to serve future natural gas and gas compression demand and potentially lift revenue and free cash flow as these assets are deployed.

See why 219 investors see Caterpillar as 24% undervalued.

Result: Fair Value of $951 (UNDERVALUED)

Still, tariff costs of about US$2.2b and the risk of long dated data center and power orders being scaled back could quickly challenge that 24% undervalued narrative.

Find out about the key risks to this Caterpillar narrative.

Next Steps

Cautious optimism runs through the Caterpillar story, so move quickly to review both sides of the debate and weigh the 4 key rewards and 1 important warning sign.

Looking for more investment ideas beyond Caterpillar?

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