Should You Buy Caterpillar Inc. (CAT)?

For its part, Deere & Company (NYSE:DE) advised investors that the slow global economic recovery, combined with inclement weather, will take a toll on the company’s full year results. Deere & Company (NYSE:DE) said it expected worldwide sales of construction equipment to fall 5% this fiscal year.

Meanwhile, Joy Global Inc. (NYSE:JOY) management isn’t painting a bright picture for itself this year. Its CEO recently stated that the company’s capital expenditure analysis for mining equipment customers is down 40% to 50%. In addition, the prospect list of major projects that Joy Global Inc. (NYSE:JOY) tracks has declined by about 30% from 2012 levels.

Assuming stabilization, Caterpillar is a value play

The troubles encountering the heavy machinery and equipment industry are now well-known and reflected in the depressed valuations in these stocks. Each of these three stocks trades for less than 12 times earnings.

In particular, Caterpillar Inc. (NYSE:CAT)’s dividend yield and quality brand lead the three presented here. The company pays 2.5% at recent prices, ahead of both its competitors and the market’s 2% dividend yield. In addition, Caterpillar is the gold standard in the industry, carrying a $55 billion market value and is a Dow Jones Industrial Average component.

Moreover, Caterpillar is likely to increase its dividend in time for its next quarterly payout, which mean new investors would receive an even bigger yield. That, in conjunction with its massive industry footprint, global reach, and attractive valuation, make Caterpillar an attractive buy.

Robert Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Should You Buy Caterpillar? originally appeared on Fool.com is written by Robert Ciura.

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