Value Investing with Sven Carlin, Ph.D. on $CAT (Nov 8, 2026)
Caterpillar is speculative and expensive: good current results and data-center demand leave a P/E of 24, about 35 across the cycle. It is insanely cyclical; if the cycle falters over the next five years, earnings could fall to $2 billion and market cap to 100 billion or less.
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Caterpillar. This has been in the AI bubble for a while now. It has now declined slightly, but the price-to-earnings ratio is still 24. Yes, the financial results look good. Everything is growing, sales are rising, and everyone is happy, in the energy and electricity sectors .
We discussed another generator, but everyone says that data centers often rely on Caterpillar . Good construction is likely to stabilize a bit , then mining, there's a lot of investment, gold is rising, and things like that .
Those are the courses there that drive everything. Higher guidance, higher profit margins, everything sounds great, but look at this 40-year chart of Caterpillar. These are the revenues now, slightly higher at the moment, but we were there in early 2012 and then they dropped significantly when everything changed, ups and downs.
So it's insanely cyclical, and if the cycle falters, they don't make any money. Yes, they'll make 11 or 12 billion now, but that's still a price-to-earnings ratio of 24. When they make $2 billion, and when the world looks really ugly, the market capitalization will be 100 billion or less.
That's the risk. It's a very big risk over the next five years. So, at the moment, it is a speculative stock just like other stocks were , and like many still are, especially since this video focuses on it.
That's all. Thank you for your suggestions. I already knew what I was going to say in this video, because when you compare things, and when I look at my matrix, where would I put Caterpillar?
The price-to-earnings ratio is 35 across the cycle, so let's say they make 8 billion on average. 8 billion. Considering the price, we arrive here. We are here with a group of expensive companies that exist in the market.