Caterpillar, Inc. (NYSE:CAT) has been one of the most resilient stocks this year. As other major stocks crashed, Caterpillar has held strongly above the $190 support. The stock would jump any time it hit the support. However, it lacked a bullish impetus to break above the previous highs. The stock has crashed 13% this month, almost the total decline year-to-date. Cyclical factors could have finally caught up with Caterpillar.
Caterpillar is broadly classified as a cyclical stock. It means that fluctuations in the state of the economy are likely to affect the stock. However, Caterpillar’s own strengths are a source of competitive advantage. The company ranks as the most valuable heavy equipment brand, with a superior dealer network.
Fundamentally, Caterpillar has maintained consistent dividend hikes in its history. The latest hike was on June 8, when the company raised the payment by 8% to $1.20. The company has paid a quarterly dividend since 1933. Caterpillar also boasts of a decent dividend yield of 2.7%.
We find that Caterpillar is a good stock for investors looking for value and growing returns. Nonetheless, technical indicators suggest that a lower price will likely happen in the next few days.
Caterpillar breaks below $190 support
Source – TradingView
Technically, Caterpillar is bearish after breaking below $190 support. The weakness could heighten after a break below. The stock could fall further to touch the next support at $148. The other support is established at $123. Investors should look to buy Caterpillar lower at established support.
Summary
Caterpillar is a sell after breaking below $190 support. Cyclical factors are influencing the current decline. The stock could decline to find the next support at $178.
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