Can Caterpillar Recover in 2013?

With shares of Caterpillar Inc. (NYSE:CAT) trading around $89.61, is CAT an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Technicals on the Stock Chart Could Indicate a Recovery

As of December 28, Caterpillar was trading 0.39 percent below its 20-day simple moving average, or SMA; 1.93 percent above its 50-day SMA; and 2.56 percent below its 200-day SMA.

Since the beginning of 2012, the stock has been in a downward trend, losing 7.63 percent between January 3 and December 28.

For comparison, shares of CNH Global NV (NYSE:CNH) climbed 5.71 percent in 2012, while shares of Cummins Inc. (NYSE:CMI) climbed 16.22 percent for the year.

Suffering against global economic headwinds, Caterpillar dramatically underperformed the Dow Jones Industrial in 2012. At around $90 per share, the stock is trading closer to its 52-week low of $78.25 than its high of $116.95, but it seems to find support around that low.

The stock currently has a beta of 1.87, which compares to the Dow Jones average of 0.97. While a read on the stock price’s forward movement is by no means certain, a generous year-end rally and its positive position between its 20-day and 200-day moving averages suggest that it could be in the adolescent stages of an up trend. This is supported by the company’s earnings history and industry trends.