Global economic activity has not ground to a halt if you look at construction and mining bellwether Caterpillar (CAT:NYSE). Its revenue has been soaring thanks to higher prices and greater sales volumes.

The 28% share price jump over the past month has not only recovered all the previous losses seen during the summer, but also put the stock 10% ahead year-to-date.

Demand has been helped by dealers restocking inventories at levels above Caterpillar’s expectations. It says inventories remain near the low end of its typical range.

While profit margins are expected to be even higher in the fourth quarter than the previous three months, Caterpillar warned that full-year margins would be at the low end, or slightly below the low end, of its target set out at the May investor day.

Investors seem to be more focused on demand where there is no cause for concern. Caterpillar believes non-residential construction in North America will strengthen. In Asia-Pacific (excluding China), moderate growth is expected; and in China ongoing weakness is likely. However, suggestions that China might relax its Covid policies and start reopening in early 2023 bodes well for an increase in infrastructure and construction activity.

‹ Previous2022-11-10Next ›