Caterpillar Buy Signal

Many are reading the recent news Caterpillar’s plans to open a factory in Thailand as indicator of possible upward stock movement.   And I happen to be one of them!  Throughout this post I will detail the recent fundamental AND technical evidence supporting a possible upward stock movement.

Construction of the Taiwanese factory will begin on the new factory in 2011, with production scheduled to begin in late-2013. The facility will produce medium track-type tractors, which are used by Caterpillar customers around the world for various construction applications.  This new facility adds to Caterpillar’s investment in Thailand. Construction on Caterpillar’s Underground Mining facility at Hemaraj Rayong Industrial Land is currently underway.

But that’s not the only reason I’m optimistic about Caterpillar’s future.  Just today their Board of Directors voted today to raise the quarterly cash dividend by two cents to forty-six ($0.46) cents per share of common stock, payable August 20, 2011.  The $0.46 dividend is an increase of five percent over the previous rate of $0.44 per share.  For 18 years in a row, Caterpillar has paid higher dividends to its stockholders, and since 1998, the company’s cash dividend has more than tripled.  Including the announcement today, Caterpillar has paid a cash dividend every year since the company was formed in 1925 and has paid a dividend every quarter since November 1933.

Finally, by examining the SwamiCharts indicators above one can easily discern the possible starting of a valley by noticing the emerging blue from the top “SwingWaveform” indicator.  As with all Swami indicators, the most recent indicators are illustrated on the far right of the x-axis with the vertical y-axis being the lookback period for up to 48 days.  Also, this possible valley is happening in conjunction with increasing volume (increasing white coloration in the middle “Volume” indicator).  That said, the pure red (short indication color) is present and can be considered as a definite warning against going long.

Additional Company Info: Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products.

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