$CAT stock call: Buy, add $540 to $580, long term

$CAT: I'm a buyer and I'd add between $540 and $580.

25% below its 200-day with a $78.1B backlog
About 19x next year's expected earnings

I think the selloff went too far because the record backlog shows no sign of a data center bust.

Not financial advice

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The bear case is real. Q3 orders fell about 11% from Q2 to $25.6B, short of the $29B or more that big investors wanted. Dealers are expected to cut about $1.6B of inventory in Q4 and tariffs cost about $2.2B this year. There is also a fear that the midterm results slow data center spending, which drove much of the rally.

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The chart: the rally ran from $267.30 in April 2025 to $1,073.46 on June 30. I count the fall since then as an A-B-C. A ended at $776.00 on July 29, B bounced to $934.99 on August 4 and C reached $550.81 on November 5. C at 1.272 times A is $556.62 and the 61.8% retrace of the whole rally is $575.25. The November 2025 low of $537.08 sits just under both.

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The business is having a record year. Q3 sales rose 17% to $20.7B and adjusted profit per share rose to $7.20 from $4.95. Power & Energy sales to users grew 36%. Operating cash flow was $4.4B and $2.0B went back to shareholders in the quarter. Analysts expect about $32 a share in 2027, so $604 is about 19 times next year's earnings.

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My plan: I'd buy a starter at $604, add between $540 and $580 and hold for years. A weekly close below $520 means my count is wrong and the 78.6% retrace near $440 comes into play. I don't need the AI story to come back for this to work. At 19 times earnings this is a good industrial at a fair price.

Sources: Caterpillar Q3 2026 results (SEC exhibit 99.1): sales $20.7B +17%, adj. EPS $7.20 vs $4.95, op. margin 20.4%, op. cash f · Globe and Mail (Reuters): record $78.1B backlog, unchanged 2026 sales outlook, $2.2B tariff cost · Investing.com: Q3 2026 call recap, Q4 outlook, FCF top half of $6B-$15B · Yahoo Finance (Zacks): record $78.1B backlog, guidance held, shares down ~17% since report · TheStreet: Morgan Stanley note, Q3 orders $25.6B down ~11% q/q vs $29B+ expected, $1.6B Q4 destocking · TIKR: 2027 EPS consensus $32.25, ~19x forward, midterm data center fears, $1.6B destocking

Not financial advice. For informational and educational purposes only.