The 1990s and 2000s saw tremendous growth in the CAT brand as its new line of compact construction equipment receives tremendous support in the market place (CAT, history, 2011). Caterpillar is currently one of the most recognized brand names in the global construction market with contracts across the world in both public and private industry applications.
Company future performance
Caterpillar's future performance is a function of understanding that the global environment has changed considerably. Construction and development has been considerable in the Middle East, which has been one of Caterpillars stronger markets. Global demand for construction equipment will likely remain strong after the current global economic crisis wanes. That said there is strong demand in the Asian markets, including China and Indonesia.
Additionally, the future for CAT appears to be in India as well. "Caterpillar is committed to achieve market leadership in India for which we will continue to explore and develop products that will meet the Indian market requirements and leverage regional and global product strategies to allow synergies with this country. As part of the strategic plan to increase our manufacturing footprint in the rapidly growing Asia-Pacific region, Caterpillar Inc. (NYSE: CAT) announced in 2008, a four-year, $200 million investment to increase manufacturing capacity in India." (NBM & CW, 2011)
Furthermore, the economic conditions specifically for CAT's operations appear to be improving over the broader market in spite of the recent economic downturn. "The ratings and outlook affirmation for CAT reflects the improving global economic outlook, the benefits of cost reductions last year, a solid liquidity position and improving credit metrics. The ratings continue to reflect CAT's competitive products, diversified customer base, global manufacturing footprint and strong international dealer network, which are helping the company rebound from the trough." (Business Wire, 2010)
Of considerable importance is the following. "An upturn in spending by businesses or indications that companies are raising investment plans would be significant." (Aeppel, Tuna, Lahart, 2009) This is to say, once the economic slowdown troughs and initiates to rise precipitously, the level of investment into Caterpillar products is forecasted to surpass the demand from the broader market.
Description of the Analysis Methodology
The methodology to determine whether Caterpillar is a strong investment is to first...
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