Best Industrial Stocks To Buy Now
- Caterpillar and Deere retreated after testing yearly highs.
- The pullback was driven by general market sentiment and the recent weakness in commodity markets.
- Both stocks are trading at less than 15 forward P/E, which is reasonably cheap for the current market environment.
Several industrial stocks have recently suffered a material pullback after testing yearly highs as traders decided to take some profits off the table amid general market weakness. This sell-off may provide speculative traders with an opportunity to buy these stocks at a discount.
Caterpillar stock has recently made an attempt to get to the test of the $240 level but lost momentum and pulled back towards the $210 level.
Analysts expect that Caterpillar will report earnings of $12.15 per share in the current year and $14.48 per share in the next year, so the stock is trading at less than 15 forward P/E. It should be noted that earnings estimates have been mostly stable in recent weeks.
At this point, the markets are worried that rising interest rates will hurt the economy and put pressure on stocks. However, commodity markets should remain strong despite the recent pullback, so demand for Caterpillar products would likely remain strong as well, and the stock would have a good chance to get back to the recent highs.
Deere stock has also found itself under significant pressure in recent trading sessions. The company is expected to report earnings of $26.18 per share in the next year, so the stock is trading at roughly 14 forward P/E.
The recent stock price action is a reaction to general nervousness and the pullback in commodity markets. However, the company’s stock is trading at reasonable valuation levels, which could attract speculative traders who are willing to bet that the recent strong pullback was not justified.
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