On Friday, the Options Action panel took a look at Caterpillar, Inc. (CAT) the big industrial machine manufacturing company. For the last few years, CAT has looked overpriced to us, but the stock kept powering higher. As a result, it was difficult to get long the stock either outright or with options. To our way of thinking, the financial performance of the company did not support its valuation as the company tended to trade at 30 to 40 times earnings. But given some recent growth on the top line and an earnings boost from the reduction in the corporate tax rate, EPS has risen and the company's intrinsic valuation has somewhat grown into its market price.
