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Caterpillar Trades Above 200-Day SMA: How to Play the Stock?

Caterpillar (NYSE: CAT) has consistently traded above its 200-day simple moving average so far this year, indicating robust upward momentum. This reflects the company's solid financial performance, steady return to shareholders, and confidence in CAT's financial health and prospects. CAT Trades Above 200-Day SMA Image Source: Zacks Investment Research Caterpillar shares have gained 32.2% in the past year, outperforming the industry's 28.4%. It has also outpaced the broader Zacks Industrial Products sector's 9.2% growth and the S&P 500's climb of 27.8%. CAT's One Year Price Performance Against Industry & Broader Market Image Source: Zacks Investment Research The stock's performance has been upbeat compared with its peers. Shares of Komatsu (OTC: KMTUY) have risen 16%, whereas Astec (NASDAQ: ASTE) and Terex (NYSE: TEX) have witnessed declines of 33.3% and 9.8%, respectively, in the same time span. Is this the right time to buy CAT shares to gain from the potential upside? Let us delve deeper into the stock's fundamentals to find out. Earnings Growth Consistent Caterpillar has reported year-over-year improvements in earnings per share for thirteen straight quarters. This demonstrates resilience amid the significant challenges faced by the company and the broader industry during this period, including the pandemic, supply-chain disruptions and prolonged contraction in the manufacturing sector since November 2022. The chart below shows an upward trend in CAT's EPS over the past three years. This feat was achieved by its cost-saving strategies, pricing actions and strong demand in its end markets. Notably, Caterpillar has delivered record EPS in 2023 and the first quarter of 2024. Caterpillar's EPS Trend in Past 3 Years Image Source: Zacks Investment Research Backlog Robust & End-Market Demand Upbeat Caterpillar reported a solid backlog of $27.9 billion at the end of the first quarter of 2024. Backlog as a percentage of revenues is higher than historic levels, which poises the ...