Caterpillar Inc. manufactures and sells construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives in worldwide. Its Construction Industries segment offers asphalt pavers, compactors, road reclaimers, forestry machines, cold planers, material handlers, track-type tractors, excavators, telehandlers, motor graders, and pipelayers; compact track, wheel, track-type, backhoe, and skid steer loaders; and related parts and tools. The company's Resource Industries segment provides electric rope and hydraulic shovels, draglines, rotary drills, hard rock vehicles, tractors, mining trucks, wheel loaders, off-highway and articulated trucks, wheel tractor scrapers and dozers, fleet management products, landfill and soil compactors, machinery components, autonomous ready vehicles and solutions, work tools, and safety services and mining performance solutions, as well as related parts and services. Its Energy & Transportation segment offers reciprocating engine powered generator sets; reciprocating engines, drivetrain, and integrated systems and solutions; turbines, centrifugal gas compressors, and related services; and diesel-electric locomotives and components, and other rail-related products. The company's Financial Products segment provides operating and finance leases, installment sale contracts, revolving charge accounts, repair/rebuild financing services, working capital loans, and wholesale financing; and insurance and risk management products and services. Its All Other Operating segment offers filters and fluids, undercarriage, ground engaging tools, fluid transfer products, precision seals, and rubber sealing and connecting components; parts distribution; logistics solutions and distribution services; brand management and marketing strategy services; and digital investments services. Caterpillar Inc. was founded in 1925 and is headquartered in Irving, Texas.

Caterpillar looks like a high-quality business, but the current valuation already reflects very strong operating performance. The company’s profitability is high: ROE of 54.2%, ROA of 11.11%, ROI of 19.21%, and a net profit margin of 14.51% are noticeably above industry medians, confirming a strong operating model. At the same time, the margin trend is not perfect: gross margin is around the industry median and has been slightly declining in recent periods, while operating margin has also softened a bit after reaching peak levels. Revenue, EBITDA, operating income, and net income have generally increased compared with earlier periods, which supports the valuation and suggests sustained demand and efficiency. However, the balance sheet looks more stretched: debt/equity of 1.64 is above the industry level, long-term debt is rising, and a quick ratio of 0.85 and current ratio of 1.37 indicate limited liquidity cushion. This is not critical for a large industrial company, but it adds risk in a cyclical sector. The most notable limiting factor is valuation multiples: P/E of 47.3, P/S of 4.99, P/B of 18.47, and P/FCF of 58.01 are significantly above industry medians, meaning the market is already paying a premium for quality and earnings resilience. The dividend yield is low and declining, so the dividend factor currently does little to support revaluation. The company’s strengths are high return on capital, solid profitability, and positive momentum in key financial metrics. The weaknesses are an expensive valuation relative to the industry, moderately increasing leverage, and less-than-comfortable liquidity. Overall, the fundamentals remain positive, but the upside for further share price growth is limited by the already high starting valuation. For an investor, this is more a story of a high-quality industrial leader than of clear undervaluation, so a moderately cautious view of fair value is appropriate.

Caterpillar, Inc.

Сильный индекс, без изменений. Быки в растерянности.

Strong index, flat. The bulls are confused.

Средний индекс, незначительно упал. Рынок на стороне быков.

Medium index, slightly down. The market is on the bulls' side.

Слабый индекс, незначительно упал

CAT demonstrates strong profitability and revenue growth, but trades at a high premium to the industry amid rising debt and weak dividend support.

Key Points
The Nasdaq Composite rose 1.3%, the S&P 500 1.1%, and the Dow 1.0% by late Friday morning.
Consumer prices rose 0.4% in August and 3.4% from a year ago, with core inflation a tenth hotter than expected.
Brent crude fell 2.7% but is still on pace for a weekly gain near 8%.
Friday marked 25 years since the Sept. 11 attacks, which closed U.S. markets for four days and remain the longest shutdown since the outbreak of World War I in 1914.
Inflation came in firm on Friday morning, rate-hike odds shot past 85%, and stocks went up. That sounds backward until you check the oil trade.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
The Nasdaq Composite (NASDAQINDEX: ^IXIC) rose 1.3% as of 11:42 a.m. ET, the S&P 500 (SNPINDEX: ^GSPC) added 1.1%, and the Dow Jones Industrial Average (DJINDICES: ^DJI) climbed 1%. Twenty-seven of the Dow's 30 components traded higher. That's a pretty solid uptick despite a bitter dose of economic data.
Falling oil prices outweighed a heavy inflation report
The Bureau of Labor Statistics issued a tough report on August's consumer prices. The CPI index rose 0.4% last month and 3.4% over the last year, right in line with economists' estimates. The core reading, which strips out food and energy, came in at 0.3% for the month, slightly above expectations. Gasoline alone accounted for more than a third of the headline increase, which tells you where the pricing pressure is coming from.
With these figures settled, traders are almost certain that the Fed will raise federal funds rates next week. CME Group's FedWatch tool put the odds of a quarter-point hike at the Sept. 15-16 meeting at 86.7%, up from 72.4% yesterday and 59.4% a week ago.
Stocks rose anyway, because oil finally reversed course. Brent Crude slid 2.7% to $104.68, though it's still on pace for a weekly increase of roughly 8%. The United States Oil Fund (NYSEMKT: USO) dropped 3.2%, the only significant decliner among the many exchange-traded funds I use for tracking daily market trends.
Almost everything else went up, as it tends to do when energy is getting cheaper. Caterpillar (NYSE: CAT) rose 2.1% and added 99 Dow points by itself. Apple (NASDAQ: AAPL) climbed 2.5% and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) gained 2.7%, which between them explained about half the Nasdaq Composite's move. The tech titans didn't have much news of their own today, so their gains are another reaction to the inflation and energy data.
Consumers are bracing, even if the market isn't
The Fed meets Tuesday and Wednesday next week. By now, a quarter-point hike seems like a formality, but there's still a voting process and chairman Kevin Warsh must make the announcement. Expectations don't count.
The more interesting question, as Principal Asset Management strategist Seema Shah put it on Friday, is whether one hike is enough after years of inflation running above target. Her answer is no. The market indexes seem to disagree, judging by today's gains.
A second data point deserves attention. The University of Michigan's consumer sentiment index fell 7.5% in September to 47.8, the second-lowest reading in the survey's history dating back to 1952. People expect inflation to continue rising, and the constrained oil shipping system isn't helping.
Friday was a good day. The week was not, and the Fed vote is coming on Wednesday. Stay tuned.
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Anders Bylund has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Apple, and Caterpillar. The Motley Fool has a disclosure policy.

A Rate Hike Is Basically Locked In, and Stock Market Indexes Rose Anyway

Key Points
Chevron is still an oil giant, but its Microsoft power deal could give investors a more predictable source of cash flow.
At around a 3.4% yield, Chevron offers income that stands out among the Dow’s non-telecom companies.
New projects in power, Angola, and base oils suggest Chevron is quietly building a business that goes beyond selling crude.
The Dow Jones Industrial Average (DJINDICES: ^DJI) may be packed with some of America's biggest and most recognizable companies, but investors looking for serious income will find that the index itself is surprisingly stingy, with a yield of around 1.5% as rising share prices have outpaced dividend growth.
This leaves only a handful of Dow stocks offering yields near 3% or higher -- and among them, Chevron (NYSE: CVX) stands out to me for a reason that goes well beyond where oil prices are headed.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Chevron is quietly becoming a power company
In June, Chevron's wholly owned subsidiary Energy Forge One signed a 20-year power purchase agreement with Microsoft (NASDAQ: MSFT) to supply electricity to a data center campus in Reeves County, Texas. A power purchase agreement is simply a long-term contract to buy electricity at agreed terms. The development, called Project Kilby, is designed to reach roughly 2.67 gigawatts of capacity, enough to power more than 530,000 Texas homes, according to Bloomberg.
The development is being built in phases, with most generation coming from turbines supplied by GE Vernova (NYSE: GEV) and additional capacity from Solar Turbines, a Caterpillar Inc. (NYSE: CAT) subsidiary. Chevron will feed the plant natural gas from its own Permian Basin wells, and the facility sits next to the data center rather than plugging into the public grid.
Here is why that structure matters to a dividend investor. Oil and gas earnings swing with commodity prices and geopolitical events, as we saw earlier this year with the Strait of Hormuz. These are the reasons energy investments and dividends tend to make people nervous. But when looking at this specific contract with Microsoft, I like how it functions as a two-decade take-or-pay contract with one of the most credit-worthy/credit-worthiness buyers on earth, more like a utility bill than a barrel of crude.
When looking at a dividend investment, you don't want to invest in a company that's reliant on political headlines or gas swings. This contract really firms up your investment. Jeff Gustavson, president of Chevron New Energies, has told reporters the company is scouting similar projects in the Midwest, Gulf Coast, Rockies, and Utah. If even a couple of those land, Chevron's cash flow gets a floor under it that the market has not yet priced as a separate business.
The dividend math behind Chevron's 3.4% yield
Chevron raised its quarterly payout by 4% in January to $1.78 per share, marking its 39th straight annual increase, and has declared the same amount in each quarter since. At roughly $210 a share, that annualized $7.12 works out to about a 3.4% yield -- more than double the Dow's average, and the highest among the index's non-telecom names. The company returned $27.1 billion to shareholders in 2025 through dividends, buybacks, and Hess share purchases.
Chevron's other September signals
Two smaller items make Chevron a solid investment this month. In August, Chevron confirmed an oil and gas condensate discovery offshore Angola that it plans to assess as a tie-back to nearby facilities it already owns -- meaning new production without building a new platform. That same month, it expanded its North American base oils distribution network through agreements with HF Sinclair (NYSE: DINO), a reminder that a chunk of Chevron's business is selling refined lubricants, not just pumping crude.
Chevron also plans to invest $7 billion in Venezuela over the next five years to more than double production to 600,000 barrels a day. There will be nuance to this investment, but if it all pays off, we could see even better gas margins.
What to do before September ends
Chevron paid its dividend on Sept. 10 to holders of record as of Aug. 19, so that particular check has already been assigned. The reason to move this month is not the calendar; it's that a final investment decision on Kilby is coming, and I think the market has yet to treat Chevron as anything but an oil stock. I'd buy it as a core income holding, expect the yield to do most of the work for the next two years, and see if the power business will be the part nobody has priced in.
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Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Caterpillar, Chevron, GE Vernova, and Microsoft. The Motley Fool has a disclosure policy.

There Are Only a Handful of Dow Stocks That Yield Over 3%. Here's My Top Pick to Buy Before September Ends.

For those looking to find strong Industrial Products stocks, it is prudent to search for companies in the group that are outperforming their peers. Caterpillar (CAT) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out.
Caterpillar is one of 187 individual stocks in the Industrial Products sector. Collectively, these companies sit at #7 in the Zacks Sector Rank. The Zacks Sector Rank considers 16 different sector groups. The average Zacks Rank of the individual stocks within the groups is measured, and the sectors are listed from best to worst.
The Zacks Rank is a proven system that emphasizes earnings estimates and estimate revisions, highlighting a variety of stocks that are displaying the right characteristics to beat the market over the next one to three months. Caterpillar is currently sporting a Zacks Rank of #1 (Strong Buy).
Over the past 90 days, the Zacks Consensus Estimate for CAT's full-year earnings has moved 11.2% higher. This is a sign of improving analyst sentiment and a positive earnings outlook trend.
Based on the latest available data, CAT has gained about 43.6% so far this year. Meanwhile, stocks in the Industrial Products group have gained about 15.5% on average. This shows that Caterpillar is outperforming its peers so far this year.
Another Industrial Products stock, which has outperformed the sector so far this year, is Gorman-Rupp (GRC). The stock has returned 58.1% year-to-date.
The consensus estimate for Gorman-Rupp's current year EPS has increased 2.7% over the past three months. The stock currently has a Zacks Rank #2 (Buy).
Looking more specifically, Caterpillar belongs to the Manufacturing - Construction and Mining industry, a group that includes 6 individual stocks and currently sits at #74 in the Zacks Industry Rank. This group has gained an average of 36.7% so far this year, so CAT is performing better in this area.
Gorman-Rupp, however, belongs to the Manufacturing - General Industrial industry. Currently, this 42-stock industry is ranked #79. The industry has moved +1.9% so far this year.
Going forward, investors interested in Industrial Products stocks should continue to pay close attention to Caterpillar and Gorman-Rupp as they could maintain their solid performance.
Research Chief Names "Single Best Pick to Double"
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This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
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Has Caterpillar (CAT) Outpaced Other Industrial Products Stocks This Year?

U.S. manufacturing activity remained in expansion territory for the eighth consecutive month in August, despite persistent trade uncertainty, elevated input costs and geopolitical tensions. Three of four key demand indicators, New Orders, Backlog of Orders and New Export Orders, remained in expansion. Meanwhile, the Customers’ Inventories Index stayed in “too low” territory or below 50%, which is generally viewed as supportive of future production.
The improving manufacturing backdrop is also supporting the Industrial Products sector, which is witnessing positive estimate revisions for the third quarter. Per the latest Earnings Trends report, the sector is expected to deliver earnings growth of 12.9% in the third quarter and 11.6% in 2026. It is one of the nine sectors expected to post double-digit growth this year. Against this backdrop, it would be ideal to invest in industrial stocks like Caterpillar CAT, Kubota KUBTY, Nordson NDSN, Zebra Technologies ZBRA and Watts Water Technologies WTS.
Manufacturing Activity Remains in Expansion
The ISM Manufacturing PMI was 54.6% in August, dipping one percentage point from July’s 55.6%. Despite this, August marked the eighth consecutive month of manufacturing growth, following a 10-month period of contraction. Despite the moderation, the sector remained in expansion for the eighth straight month following 10 consecutive months of contraction. Five of the six largest manufacturing industries expanded, led by transportation equipment, petroleum and coal products, computer and electronic products, machinery, and food, beverage and tobacco products.
The New Orders Index declined to 53.7% from 56.7% but remained in expansion for the eighth consecutive month. The Production Index held at a strong 58.3%, extending its expansion streak to 10 months. The Backlog of Orders Index was 51.8%, while new export orders edged up to 53.2%, expanding for the second consecutive month.
The Employment Index slipped to 51.2% from 52.8%, but remained in expansion territory for the second consecutive month. Only one of the six largest manufacturing industries reported higher employment, pointing to a more cautious approach toward hiring across the sector. Still, the overall employment reading suggests that manufacturers are not yet broadly cutting workforce levels as production remains healthy.
The Inventories Index was 50.6% in August, down 0.6 percentage points compared with 51.2% in July. The Customers’ Inventories Index rose to 42.8% in August from 40.7% in July, and remained in “too low” territory in August. This is generally positive for future production as manufacturers may need to replenish inventories as demand improves.
Cost pressures continue to challenge manufacturers. The Prices Index remained elevated at 71.1%, indicating higher raw-material prices for the 23rd consecutive month. Steel, aluminum, copper, electrical components and electronic components were among the materials reported as rising in price or facing supply constraints. Tariffs and geopolitical tensions are adding to cost pressures and could weigh on margins. In response, industry participants are focusing on pricing actions, cost optimization, productivity gains and diversification of supplier networks to offset these pressures.
Outlook Remains Constructive, but Risks Persist
Overall, the trend so far this year points to a continued manufacturing recovery. Lean customer inventories, expanding new orders and sustained production provide a positive foundation for future activity. At the same time, elevated input costs, tariffs, supply-chain challenges and geopolitical uncertainty could limit the pace of improvement. ISM's 2026 forecast calls for 8.4% growth in manufacturing revenues, 4.9% growth in capital expenditures and a 9.7% increase in production capacity, supporting the case for industrial stocks positioned to benefit from renewed manufacturing investment.
5 Industrial Products Stocks to Buy
Caterpillar: The company ended the second quarter of 2026 with a record backlog of $72 billion, 92% higher than last year. It is positioned to benefit from several secular growth trends, including U.S. infrastructure spending, mining demand related to the energy transition, automation adoption, data center expansion and sustainability investments. To capitalize on rising power-generation and oil-and-gas demand, CAT will restart production of its 10-megawatt gas engine platform. It plans to bring about 1.5 gigawatts of capacity back online. It is also expanding turbine capacity and has repurposed a 250,000-square-foot facility in Wamego, KS. CAT is simultaneously investing in services, e-commerce, sustainability, electrification and other digital initiatives.
The Zacks Consensus Estimate for Caterpillar’s current-year earnings moved up 9.7% in the past 60 days. The consensus mark indicates year-over-year growth of 43.4%. The company has a trailing four-quarter earnings surprise of 18.1%, on average. Caterpillar has an estimated long-term growth of 21.1% and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar Inc. Price and Consensus
Kubota: The company is benefiting from strength in construction equipment, particularly in North America, along with improving prospects in Europe and continued growth in India. Disciplined fixed-cost management and profitability improvement measures are expected to support profitability. Agricultural machine automation is one of the key pillars of these initiatives. The company is expanding its product lineup, adding a variety of attachments to meet customer needs.
The Zacks Consensus Estimate for Kubota’s earnings for fiscal 2026 has moved up 36% over the past 60 days and suggests year-over-year growth of 40%. The company has a trailing four-quarter earnings surprise of 41.7%, on average. It has an estimated long-term earnings growth rate of 10% and currently carries a Zacks Rank #2 (Buy).
Kubota Corp. Price and Consensus
Nordson: The company is poised to gain from its diversified business structure, which helps mitigate the adverse impact of weakness in one end market with strength across the others. Over time, Nordson has been capitalizing on acquisitions by penetrating unexplored markets and expanding its product lines. Nordson remains committed to rewarding its shareholders through dividend payments and share buybacks.
The Zacks Consensus Estimate for Nordson for fiscal 2026 earnings has moved up 2% over the past 60 days and suggests year-over-year growth of 15.6%. The company has a trailing four-quarter earnings surprise of 32.4%, on average. It has an estimated long-term earnings growth rate of 13% and currently carries a Zacks Rank of 2.
Nordson Corporation Price and Consensus
Zebra Technologies: The company is benefiting from broad demand across retail, manufacturing and healthcare, with mobile computing, printing, machine vision and RFID supporting growth across both segments. Its integrated hardware, software and services portfolio is deepening customer adoption of automation and AI-enabled workflows, while Elo Touch and Photoneo expand its addressable opportunities. Healthy cash generation continues to support share repurchases and investment, while device upgrade cycles and growing software adoption strengthen the longer-term outlook. Its expanding transportation and logistics pipeline also supports future growth opportunities.
The Zacks Consensus Estimate for Zebra Technologies for fiscal 2026 earnings has moved up 9% over the past 60 days. The estimate suggests year-over-year growth of 28.2%. The company has a trailing four-quarter earnings surprise of 15.5%, on average. It currently carries a Zacks Rank of 2.
Zebra Technologies Corporation Price and Consensus
Watts Water Technologies: The company completed five acquisitions in 2025 to broaden its product set, extend market reach and increase nonresidential exposure. The acquired businesses are performing well and remain on track to achieve or exceed targeted synergies through the One Watts performance system. Watts Water's second-quarter 2026 results benefited from favorable pricing, higher volumes and data center demand, which helped drive record sales, operating income and earnings per share. Data center cooling is emerging as a growth avenue as liquid cooling adoption, new products and broader customer relationships expand the opportunity. A healthy balance sheet supports capacity investments, selective M&A and shareholder returns.
The Zacks Consensus Estimate for Watts Water Technologies for fiscal 2026 earnings has moved up 4.7% over the past 60 days and the estimate suggests year-over-year growth of 20.5%. The company has a trailing four-quarter earnings surprise of 10.4%, on average. It has an estimated long-term earnings growth rate of 8% and currently carries a Zacks Rank of 2.
Watts Water Technologies, Inc. Price and Consensus
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
This article originally published on Zacks Investment Research (zacks.com).

5 Stocks to Buy as U.S. Manufacturing Stays on Growth Track

Key Points
Warren Buffett guided the Berkshire Hathaway holding company to market-beating returns for 60 years.
He regularly said that everyday investors could do well by purchasing an exchange-traded fund that tracks a diversified index like the S&P 500.
In February 2014, Buffett specifically recommended the Vanguard S&P 500 ETF for its low fees and its ability to help young investors secure their financial future.
Warren Buffett is one of the world's most iconic investors. He served as CEO of the Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) holding company from 1965 to 2025, turning it into a $1 trillion conglomerate with numerous subsidiaries, a stock portfolio worth over $350 billion, and another $365 billion in cash.
Berkshire stock returned 19.7% annually during Buffett's 60-year tenure, so an investment of $500 in 1965 would have grown to a whopping $24 million by the end of 2025. But he was a seasoned professional, so he always knew the average investor would struggle to replicate his performance. That's why he consistently advocated exchange-traded funds (ETFs) that track a diversified index, like the S&P 500.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
The Vanguard S&P 500 ETF (NYSEMKT: VOO) is one that Buffett specifically recommended in 2014 for its ultra-low fees. Here's how it could help young investors in their 20s build a financially secure future.
America's best stocks from 11 economic sectors
The S&P 500 is the most widely followed U.S. stock market index for a couple of reasons. First, it's made up of 500 companies from 11 different sectors of the economy, so it's highly diversified. Second, it has very strict entry criteria: its members must maintain a market capitalization of at least $22.7 billion and be profitable. But even after those boxes are ticked, a special committee ultimately decides which companies make the cut.
The S&P is weighted by market capitalization, so the largest companies in the index have a much higher representation than the smallest. Therefore, despite its diversified composition, the information technology sector has a massive weighting of 36.6% because it's home to five companies worth $1 trillion or more (Nvidia, Apple, Microsoft, Broadcom, and Micron Technology).
Below are the 11 sectors that make up the Vanguard S&P 500 ETF, along with their weightings and the three largest companies in each.
S&P 500 Sector
Sector Weighting
Largest Companies
Information technology
36.6%
Nvidia, Apple, Microsoft
Financials
12.5%
Berkshire Hathaway, JPMorgan Chase, Visa
Communication services
9.9%
Alphabet, Meta Platforms, Netflix
Consumer discretionary
9.4%
Amazon, Tesla, Home Depot
Healthcare
9.1%
Eli Lilly, Johnson & Johnson, AbbVie
Industrials
8.7%
Caterpillar, GE Aerospace, RTX Corporation
Consumer staples
4.7%
Walmart, Costco, Coca-Cola
Energy
3.4%
ExxonMobil, Chevron, ConocoPhillips
Utilities
2.1%
NextEra Energy, Constellation Energy, Southern Co
Real estate
1.9%
Welltower, Prologis, Equinix
Materials
1.8%
Linde, Newmont, Freeport-McMoRan
Data source: Vanguard. Sector weightings are accurate as of July 31, 2026, and are subject to change.
The technology sector is exerting a particularly strong influence on the performance of the S&P 500 right now, thanks to the artificial intelligence (AI) revolution, which began to gain momentum when OpenAI's ChatGPT application surpassed 100 million users in early 2023. In fact, if we exclude the sector's contribution over the last three-and-a-half years, the S&P 500's return drops from 101% to just 63%.
Simply put, the Vanguard ETF gives investors exposure to the fastest-growing area of the market in a diversified manner, which is why it's a popular long-term investment option.
Taking Buffett's advice could yield spectacular results
The S&P 500 has returned 10.7% since its inception in 1957 (assuming all dividends were reinvested). But it has delivered an accelerated return of 13.9% since Buffett recommended the Vanguard S&P 500 ETF in 2014, primarily thanks to the tech sector.
Past performance isn't always a reliable indicator of future results, but a 25-year-old investor could build a very nice retirement fund using the Vanguard ETF if its historical returns persist. Below are two potential outcomes.
Starting Balance at Age 25
Compound Annual Return
Balance at Age 65
$20,000
10.7%
$1,166,634
$20,000
13.9%
$3,647,362
Those results don't include costs, but with an expense ratio of just 0.03%, investors would incur an annual fee of just $3 for every $10,000 they have parked in the Vanguard ETF.
To conclude, investors probably shouldn't sell their entire position at retirement age, because compounding yields the greatest benefits over time. With a large enough balance after 40 years, the subsequent annual returns could provide a significant income to fund life after employment.
Should you buy stock in Vanguard S&P 500 ETF right now?
Before you buy stock in Vanguard S&P 500 ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
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*Stock Advisor returns as of September 8, 2026.
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If I Were in My 20s, I'd Buy This Vanguard ETF Warren Buffett Recommended and Hold It Forever

Caterpillar Inc. CAT shares have gained 94.5% in the past year, outperforming the manufacturing - construction and mining industry's 78.7% growth. In comparison, both the Zacks Industrial Products sector and the S&P 500 have advanced 19.5%.
CAT has also delivered stronger returns than competitors, Komatsu KMTUY and Terex Corp. TEX, whose shares have risen 35.5% and 23.5%, respectively, during the same period.
While the impressive rally may attract investors, it is important to assess the drivers behind the stock’s performance and determine whether the momentum is sustainable or if potential risks could weigh on future returns.
CAT Ends Q2 With Record Backlog, Revenues Boosted by Demand
Caterpillar generated $20.5 billion in second-quarter 2026 revenues, representing a 24% year-over-year increase. Growth was largely fueled by a $3.1 billion rise in sales volume across its business segments. Sales increased across all three primary operating segments and every geographic region. Sales exceeded the $20 billion mark for the first time in the company’s history.
Caterpillar ended the second quarter of 2026 with a record backlog of $72 billion, 92% higher than last year. Backlog increased across all three segments, reflecting broad-based demand strength throughout the company’s portfolio.
Around 59% of this backlog is expected to be delivered over the next 12 months. This percentage has remained relatively stable over the past three quarters, highlighting the strength and consistency of demand.
Caterpillar Demonstrates Earnings Momentum
Cost of sales climbed 18% year over year due to higher manufacturing expenses, including tariff-related impacts. Selling, general and administrative expenses, and research and development expenses increased 19% and 12%, respectively. Despite higher expenses, adjusted operating margin expanded to 21.9% from 17.4% in the year-ago quarter, as higher volumes and pricing more than offset these pressures. Caterpillar reported adjusted earnings of $8.17 per share for the second quarter of 2026, up 73% year over year.
CAT 2026 Revenue Outlook Raised, Margin Pressure Remains
Caterpillar expects 2026 sales and revenues to increase in the mid-to-high teens, up from its previous low-double-digit growth forecast. The revised outlook reflects healthy demand across all three primary segments.
Adjusted operating margin is projected near the bottom of its target range, excluding tariff recoveries. Caterpillar maintains adjusted operating margin outlook of 15–19% at revenue levels of around $60 billion. If revenues reach $72 billion, operating margins are expected to be 18–22%, while revenues of $100 billion could support margins in the range of 21–25%.
Full-year Machinery, Power & Energy (MP&E) free cash flow is expected to land in the upper half of the company’s $6-$15 billion target range.
Caterpillar’s Earnings Estimates Continue Moving Higher
Earnings estimates for CAT have moved up for both 2026 and 2027 over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 points to year-over-year earnings growth of 43.4%, while the 2027 estimate implies growth of 20.3%, reflecting improving confidence in the company’s earnings trajectory.
CAT Trades at a Premium Valuation
CAT is currently trading at a forward 12-month P/E of 26.13X, a premium compared with the industry’s 24.45X.
Meanwhile, Komatsu and Terex are cheaper options, trading at a forward 12-month P/E of 17.38X and 11.26X, respectively.
Caterpillar Continues to Deliver Superior Returns
Caterpillar’s return on equity (ROE) is 55.53%, higher than the industry’s average of 53.33%. It is also higher than the S&P 500’s return of 38.46%. Meanwhile, Komatsu offers an ROE of 10.51% and Terex an ROE of 12.24%.
CAT Positioned for Long-Term Growth
Caterpillar is positioned to benefit from several secular growth trends, including U.S. infrastructure spending, mining demand related to the energy transition, automation adoption, data center expansion and sustainability investments.
To capitalize on rising power-generation and oil-and-gas demand, CAT will restart production of its 10-megawatt gas engine platform, which was discontinued in 2022. It plans to bring about 1.5 gigawatts of capacity back online, with shipments to begin in the fourth quarter. It is also expanding turbine capacity and has repurposed a 250,000-square-foot facility in Wamego, KS. CAT is simultaneously investing in services, e-commerce, sustainability, electrification and other digital initiatives. It expects service revenues to increase from $24 billion in 2025 to $30 billion by 2030, providing an additional source of recurring, higher-margin growth.
How Should Investors Approach CAT Stock Now?
Caterpillar continues to demonstrate strong execution, supported by robust revenue and earnings growth, a record backlog and upward revisions to earnings estimates. Its broad-based demand strength across segments, coupled with exposure to favorable long-term trends such as infrastructure development, electrification-driven mining activity, data center expansion and rising power demand, provides a solid foundation for continued growth.
The company is also strengthening its higher-margin services business, which should support more resilient and recurring revenue growth over the long term. While CAT's premium valuation warrants some caution following its sharp stock-price rally, its strong fundamentals, improving earnings outlook and significant growth opportunities make the stock an attractive choice for investors. Caterpillar currently carries a Zacks Rank #2 (Buy).
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Caterpillar Gains 95% in a Year: Time to Buy, Sell or Hold the Stock?

Key Points
Caterpillar dominates the global machinery market with a massive dealer network and significant cash flow generation.
Corning is a leader in advanced materials science, benefiting from high demand in optical communications and mobile tech.
Which industrial powerhouse or technology innovator is the better addition to your portfolio for 2026?
Is the global economy better served by heavy iron or high-tech glass? Choosing between Caterpillar (NYSE:CAT) and Corning (NYSE:GLW) requires weighing the stability of a construction giant against a materials science innovator.
Caterpillar builds the massive machines that move the earth, while Corning develops the precision glass and fiber that move data. These companies represent two different ways to play the industrial and technological trends of the decade. This comparison examines their financial strength and current market value to help you decide which stock is a better buy today.
The case for Caterpillar
In its latest annual report, Caterpillar noted that its primary customers operate in the construction, energy, transportation, and mining industries. Caterpillar operates as a global leader in the heavy machinery market, serving customers among construction stocks and mining firms through a network of 160 independent dealers. Recent strategic moves include the 2026 acquisitions of Skycatch, Inc. and Monarch Tractor, which help the company expand its capabilities in autonomous operations and electric tractor technology.
In FY 2025, revenue reached nearly $67.6 billion, representing growth of roughly 4.3% compared to the prior year. Net income for the period was close to $8.9 billion, which was a decrease from approximately $10.8 billion in 2024. This trend reflects a shift in the net margin, which moved from nearly 16.7% down to roughly 13.1% over that same period.
As of its December 2025 balance sheet, the debt-to-equity ratio is roughly 2.0x. This means total debt, including both short-term and long-term obligations, is twice the value of shareholder equity. The current ratio is nearly 1.4x, which measures a company's ability to cover its short-term debts with its short-term assets, while free cash flow reached close to $7.5 billion.
The case for Corning
In its latest annual report, Corning disclosed a concentrated customer base across its optical, mobile electronics, and automotive segments. For instance, three customers account for roughly 59% of its Display segment sales, and customer concentration like this adds a layer of risk to the business. The company maintains its market lead through collaborative engineering designs with major technology and automotive manufacturers to produce specialized glass and ceramic parts.
In FY 2025, revenue reached nearly $15.6 billion, which was a sharp 19.1% increase over the previous year. Net income rose significantly to roughly $1.6 billion, up from approximately $506 million in FY 2024. This performance drove the net margin up to close to 10.2%, showing a substantial improvement in profitability compared to the prior two years.
As of its December 2025 balance sheet, the debt-to-equity ratio is approximately 0.9x. This indicates that total debt is slightly less than the value of shareholder equity, suggesting a more conservative capital structure than its peer. The current ratio is close to 1.6x, and free cash flow was approximately $1.4 billion, reflecting the cash generated after subtracting capital expenditures.
Risk profile comparison
Caterpillar faces significant macroeconomic sensitivity because demand for its heavy equipment is tied to global commodity prices and capital expenditure levels. It also faces intense competition from global rivals such as Deere & Company (NYSE:DE) and Komatsu (OTC:KMTUF), which can lead to pricing pressure and margin volatility.
Corning is highly dependent on a small number of key customers, meaning the loss or insolvency of a single partner could materially impact its total revenue. The company also deals with complex supply chain risks in the Asia-Pacific region and faces competition from materials leaders like Thermo Fisher Scientific (NYSE:TMO) in its life sciences business. Furthermore, the firm must constantly defend its intellectual property rights against potential infringement claims on a global scale.
Valuation comparison
Caterpillar appears more attractively valued based on its P/S ratio, while Corning carries a significantly higher multiple based on forward P/E and future earnings estimates.
Metric
Caterpillar
Corning
Forward P/E
28.7x
43.0x
P/S ratio
5.3x
7.8x
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
These two stocks are compelling options, but they have a few drawbacks to consider as well. They represent two different sectors, but both are cyclical, providing a basis for comparison. So, which is the better buy for 2026?
Caterpillar is an industrial giant that's largely driven by infrastructure cycles. It manufactures crucial equipment for heavy industry -- construction, mining, and other businesses that require heavy-duty machinery. It recently acquired Skycatch and Monarch Tractor to focus on electric and autonomous vehicles, showing it's investing heavily in its future growth.
Corning may appear to be an industrial company because of its long history in glass manufacturing, but it is generally classified as an information technology stock. It produces specialty glass, optical fiber, display technologies, and other materials used in communications and electronics. Growth in AI data centers has been a particularly important tailwind, helping drive strong revenue growth in fiscal 2025. However, Corning faces customer concentration risk due to its relationships with a relatively small number of large technology companies. Its share prices also appear to reflect considerable optimism about those industry tailwinds.
Which company's stock is the better buy? It depends on your investing goals and risk tolerance. Corning could offer greater growth potential, especially with continued demand for AI infrastructure. Caterpillar has a long history of success along with customer diversification, so it appears to be the more balanced choice. I would choose Caterpillar as the steadier long-term investment.
Should you buy stock in Caterpillar right now?
Before you buy stock in Caterpillar, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Caterpillar wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
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Pamela Kock has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Caterpillar, Corning, and Thermo Fisher Scientific. The Motley Fool has a disclosure policy.

Caterpillar vs. Corning: Which Stock Is a Better Buy in 2026?

Key Points
Caterpillar's stock has skyrocketed more than 90% in the last year.
A large portion of the backlog is contracts extending multiple years.
Caterpillar (NYSE: CAT) posted eye-popping numbers in the second quarter of 2026 as its backlog grew 92% year over year to more than $72 billion. The narrative behind the backlog is just as important as the number itself, as the AI boom and data centers in particular drove the astonishing growth.
Strong demand for large generator sets and turbines grew 72%. Caterpillar's biggest challenge now is not the immense demand; it's the company's capacity to meet it. This is what's actually limiting growth as Caterpillar does its best to keep up with orders.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
The AI-related boom has largely broken away from the traditional construction cycle, as many of Caterpillar's Power & Energy customers are ordering equipment through 2030. Approximately 59% of the $72 billion backlog is expected to be delivered in the next year. Still, the Power & Energy segment's portion extends much further out than is considered normal for the construction equipment industry.
The company is responding to demand by planning to restart production of its 10-megawatt gas engine platform, bringing about 1.5 gigawatts of capacity back online as production ramps up, with shipments starting before the end of the year.
Caterpillar has long been a bellwether for the construction industry at large. Yet, the company has now decoupled from the construction cycle, and its future is more closely tied to power grids than to housing starts. The construction cycle, as we know it, has evolved. The company's stock has risen more than 90% in the past 12 months and is trading around $815 per share as of this writing.
I'm bullish on Caterpillar, as its revenue visibility over the next half-decade is impressive.
Should you buy stock in Caterpillar right now?
Before you buy stock in Caterpillar, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Caterpillar wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Caterpillar. The Motley Fool has a disclosure policy.

Caterpillar's Power Generation Backlog Just Hit $72 Billion. The Construction Cycle Barely Matters Anymore.

Key Points
Bitcoin’s massive gains don’t eliminate its fundamental investment risks.
The cryptocurrency's value still depends heavily on future investor demand.
Productive businesses offer a stronger foundation for long-term wealth.
Microsoft co-founder Bill Gates was recently asked where he would put money if he wanted to diversify away from the U.S. dollar. His choices included gold, the euro, Chinese yuan, and cryptocurrency. Gates said he still wouldn't choose crypto as an investment, calling it a "pure mania-driven asset." If he wanted to diversify away from the U.S. dollar, he'd rather own a globally diversified basket of stocks. He makes sense.
It's not because Bitcoin (CRYPTO: BTC) is worthless. Bitcoin has clearly proven that people are willing to assign enormous value to a decentralized digital asset. And anyone who listened to Gates' warnings years ago and avoided Bitcoin missed some spectacular gains. But price appreciation doesn't necessarily make something a great long-term investment.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Stocks actually produce something
When you buy shares of a company, you're buying a piece of a business that can generate revenue, earnings, and cash flow. Apple sells iPhones. ExxonMobil produces oil. Caterpillar sells heavy equipment.
Bitcoin doesn't produce anything. There's no revenue, earnings, or cash flow. Your return depends solely on somebody eventually paying you more for it than you paid.
Gates has been making this argument for years. Back in 2018, he described Bitcoin as a "greater fool theory" investment. In 2022, he said he preferred investments with "valuable output," arguing that companies create products while crypto's value ultimately depends on what someone else is willing to pay. If you're in it for the long haul, this is not something you want to ignore.
Bitcoin can still go much higher
None of this means Bitcoin will collapse. There are legitimate arguments for owning it. Bitcoin has a fixed maximum supply of 21 million coins, can be transferred globally without a traditional financial intermediary, and has gained acceptance among institutional investors.
It could reach $100,000. It could reach $200,000. But determining what Bitcoin should be worth is extremely difficult because there are no traditional fundamentals underneath it. You can't calculate a price-to-earnings ratio, estimate future dividends, or project free cash flow and discount it back to today's value. You're largely betting on future demand. And that's precisely Gates' point.
I'd take Gates' advice
Years ago, Gates made a huge mistake shorting Tesla. It was a rookie move by a guy who clearly knows how to make a lot of money but also, sometimes, lacks the creativity and foresight to see beyond the confines of mediocrity.
That said, if I had to choose between investing $10,000 in Bitcoin and investing $10,000 in a diversified portfolio of profitable companies for the next 20 years, I'd take the stocks. Not because Bitcoin can't outperform them. It certainly could. But businesses create products, generate profits, reinvest capital, and compound earnings. Over long periods, that gives you something tangible supporting your returns.
Bitcoin gives you scarcity, network effects, and the expectation that future buyers will value those things even more. That's been an incredibly profitable bet so far. But Gates is right that it's still a bet driven largely by what someone else will eventually pay. And that's not an ideal way to build long-term wealth.
Should you buy stock in Bitcoin right now?
Before you buy stock in Bitcoin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Jeff Siegel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Bitcoin, Caterpillar, Microsoft, and Tesla. The Motley Fool has a disclosure policy.

Bill Gates Says He Still Won't Invest in Crypto, Calls It a "Pure Mania-Driven Asset." Here's Why He's Right.

Caterpillar (CAT) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #1 (Strong Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.
The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.
The power of a changing earnings picture in determining near-term stock price movements makes the Zacks rating system highly useful for individual investors, since it can be difficult to make decisions based on rating upgrades by Wall Street analysts. These are mostly driven by subjective factors that are hard to see and measure in real time.
As such, the Zacks rating upgrade for Caterpillar is essentially a positive comment on its earnings outlook that could have a favorable impact on its stock price.
Most Powerful Force Impacting Stock Prices
The change in a company's future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. The influence of institutional investors has a partial contribution to this relationship, as these big professionals use earnings and earnings estimates to calculate the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their bulk investment action then leads to price movement for the stock.
Fundamentally speaking, rising earnings estimates and the consequent rating upgrade for Caterpillar imply an improvement in the company's underlying business. Investors should show their appreciation for this improving business trend by pushing the stock higher.
Harnessing the Power of Earnings Estimate Revisions
As empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, tracking such revisions for making an investment decision could be truly rewarding. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> .
Earnings Estimate Revisions for Caterpillar
This construction equipment company is expected to earn $27.34 per share for the fiscal year ending December 2026, which represents no year-over-year change.
Analysts have been steadily raising their estimates for Caterpillar. Over the past three months, the Zacks Consensus Estimate for the company has increased 10.7%.
Bottom Line
Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
The upgrade of Caterpillar to a Zacks Rank #1 positions it in the top 5% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
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