Shares of Caterpillar Inc. CAT, +4.33% shot up 4.7% toward a six-week high in morning trading Tuesday after the construction and mining equipment company was upgraded at Jefferies, with analyst Stephen Volkmann saying the company has historically been a “strong hedge” to commodity and general inflation. The stock’s rally was enough to pace the Dow Jones Industrial Average’s DJIA, +0.41% gainers. Volkmann raised his rating to buy from hold, and boosted his stock price target to $260, which is well above the stock’s May 17, 2021 record close of $244.79. “[W]e believe the Russia/Ukraine crisis has fundamentally altered global commodity markets and is likely to drive a decade of reinvestment, similar to what the world experienced in the 1970s,” Volkmann wrote in a note to clients. He said historically, inflation has helped drive an expansion in how investors value the stock and eventually provided a boost to earnings. The stock has gained 0.8% over the past three months, while continuous crude oil futures CL00, +7.04% have soared 73.9% and the Dow has slipped 8.0%.
