Heavy Equipment Giant Caterpillar Taps Artificial Intelligence To Explore Breakout

Dow Jones component and heavy equipment leader Caterpillar (CAT) just announced a new initiative with Luck Stone to drive autonomous solutions. CAT stock is now exploring a new buy zone as it earns a spot on the IBD Breakout Stocks Index.

On Dec. 15, Caterpillar announced the partnership with Luck Stone to scale artificial intelligence in the aggregates industry and beyond. Luck Stone is the nation's largest family-owned and operated producer of crushed stone, sand and gravel.

The collaboration will deploy Caterpillar's autonomous solutions to Luck Stone's Bull Run Plant in Chantilly, Virginia. Marking its first deployment in the aggregates industry, the alliance will expand Caterpillar's autonomous truck fleet to include the 100-ton-class (90-tonne-class) Cat 777.

Looking to accelerate artificial intelligence beyond mining, Caterpillar will implement its existing Cat MineStar Command for Hauling system at the Bull Run quarry on a fleet of 777G trucks. This will enable the company to gain greater insights on quarry operations, to tailor the next generation of autonomous solutions specific to quarry and aggregate applications.

See Who Joins CAT Stock On The IBD Breakout Stocks Index

Caterpillar is the world's leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.

Last year, the Deerfield, IL-based company generated revenue of $51 billion. In Q3, Caterpillar posted a 21% sales increase to $15 billion.

Bottom-line metrics look solid, with Wall Street forecasting 48% earnings growth this quarter, matching the same increase in Q3. Analysts expect EPS growth of 28% for the full year.

Showing institutional demand, CAT stock sports a "B+" Accumulation/Distribution Rating while 78 funds with an "A+" rating owns shares.

In Stock Checkup, Caterpillar earns top billing in the Machinery-Construction/Mining group, with a 98 Composite Rating. Joined by highly rated peers CNH Industrial (CNHI) and Terex (TEX), this group ranks a very strong No. 7 among the 197 groups IBD tracks.

CAT stock has shown strength since last month's feature in the IBD Stock Analysis, scooping up a spot on the IBD Big Cap 20. After forming a cup pattern, Caterpillar has traded sideways to form a flat base seen on a weekly chart. The buy point is 239.95.

This price action is constructive and healthy, viewed in contrast with the volatility and selling pressure in the market indexes. Notably, the relative strength line has hit a new high, confirming the stock's resilience and leadership.

On Wednesday, Caterpillar rose nearly 3%, helping it excavate a new buy zone. Volume came in 14% above average and sharply higher than the day before.

While keeping an eye on the overall market, see if Caterpillar can build on its breakout in heavy volume.

The IBD Breakout Opportunities ETF from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this fund allows you to invest in the entire index in addition to, or rather than, buying individual stocks. Learn more here about the ETF and Innovator funds.

Follow Matthew Galgani on Twitter at @IBD_MGalgani.

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