5 Best Undervalued Aristocrats to Buy in September

1. Caterpillar Inc. (NYSE:CAT)

P/E Ratio: 14.42

Caterpillar Inc. (NYSE:CAT) is an Illinois-based construction machinery and equipment company that also deals in insurance and financial services for its consumers. On June 8, the company announced an 8.1% hike in its quarterly dividend to $1.20 per share. The company has been raising its dividends consistently for the past 28 years. As of September 7, the stock’s dividend yield came in at 2.65%.

In Q2 2022, Caterpillar Inc. (NYSE:CAT) reported revenue of $14.2 billion, which showed an 11% growth from the same period last year. In the first half of the year, the company’s operating cash flow stood at $2.5 billion, and paid $600 million in dividends. This shows that the company’s cash position is stable to finance its shareholder returns.

In August, Credit Suisse raised its price target on the stock to $236 with an ‘Outperform’ rating on the shares as the firm sees strong demand across all segments of the company.

At the end of Q2, 45 of the hedge funds tracked by Insider Monkey’s database owned stakes in Caterpillar Inc. (NYSE:CAT), compared with 54 in the previous quarter. The collective value of those 45 stakes was over $3.25 billion. With a position worth over $1.3 billion, Fisher Asset Management owned the largest position in the company on June 30.

Diamond Hill Capital mentioned Caterpillar Inc. (NYSE:CAT) in its Q1 2022 investor letter. Here is what the firm had to say:

“We also initiated a position in Caterpillar (NYSE:CAT), one of the world’s leading manufacturers of construction and mining equipment. It’s a company we know well, as we have owned it in our large cap portfolio for quite some time. Recent share price weakness provided an opportunity for us to add it to our large cap concentrated portfolio at an attractive discount to our estimate of intrinsic value. We believe Caterpillar stands to benefit from increased capital investment supported by a healthier/recovering end market environment, particularly in construction and mining.”

You can also take a look at 10 Small-Cap Stocks that Pay Dividends and 10 Safe Dividend Stocks with Over 4% Yield

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