Gerald Johnson, a director at Caterpillar (CAT), recently bought 100 shares. The buy increased his stake by 3%, and came to a total cost of $31,848.
Johnson was also a buyer in February of 100 shares, and last December. Otherwise, the company CFO sold about 20% of his stake for $3.8 million in January, and a group President sold 27% of his holdings in February for about $860,000, both at higher prices than where shares trade today.
Overall, Caterpillar insiders own 0.2% of shares.
The construction equipment manufacturer is down 7% over the past year, underperforming the overall market. Operationally, Caterpillar has fared worse, with a 10% decline in revenues and a 30% drop in earnings growth.
Shares aren’t quite a value yet, but do trade at a discount to the overall market at 16 times earnings. And Caterpillar is an industry leader in its space.
Action to take: Shares are coming off of a 52-week low from the recent market selloff, and may have a bit more upside in the months ahead. Shares are nearing a heavily traded zone in the $330 range, and may have a tough time moving higher from there until economic conditions and sentiment improves.
At current prices, Caterpillar also pays a 1.8% dividend.
For traders, the September $330 calls, last trading for about $1.67, could see high double-digit returns. Traders may want to take profits if the option moves in-the-money, given that it’s a heavily traded zone for the stock.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.