Not A Caterpillar But A Glorious Butterfly

America is the land of great growth stocks, and Caterpillar is a wonderful example. Not only that, but its products play a critical role in the data centre boom. Caterpillar doesn’t just supply the machines that help its customers build out their projects; it supplies machines to power them and has a fast-growing services business helping them maintain all that equipment.

Caterpillar is everywhere.

Caterpillar is rapidly becoming a service business.

I found this online, but apparently it doesn’t exist. Why not? What a beast it would be if it did.

You can find detailed descriptions of this truck online, but Caterpillar doesn’t make it so you can’t own one. An opportunity for the future. Meanwhile, the company has plenty going on.

Caterpillar is unlikely to set the world on fire in any one quarter, but the relentless compounding, quarter after quarter, year after year and decade after decade produces remarkable long-term performance.

Sales and revenues increased 10% to $17.6 billion, an all-time record for a single quarter. Backlog grew by about $2.4 billion, driven by strong orders in Energy & Transportation. The backlog is now $39.8 billion, which is also an all-time record and positions us for sustained momentum and long-term profitable growth.

We also generated $3.2 billion of ME&T free cash flow, and we deployed about $1.1 billion to shareholders through dividends and share repurchases during the quarter. 

The strong momentum we achieved in the third quarter, combined with the anticipated growth through year-end, sets the stage for exciting opportunities ahead.

So we’re definitely really excited about the prime power opportunity with data centers and more broadly, just the demand for power that data centers and broader trends in the industry are putting on to the grid. We’re going to see a lot more of this, I believe. Prime power is a great opportunity for us because it creates services opportunity as we move forward as well. So definitely, you saw the Joule announcement that’s in our recip. Part of our capacity addition there will go to serve some of that. And with Solar, we’re seeing a lot of ordering activity, and it’s really healthy, as you suggest, but it’s not just power generation.

Power generation is seeing more activity, but oil and gas has been really strong, too, because we’re moving a lot of natural gas, and I think that trend is going to continue. So definitely a really positive outlook at Solar Turbines. 

Joseph Creed, CEO, Caterpillar, Q3 2025, 29 October 2025

Share Recommendations

Caterpillar. CAT

I am putting Caterpillar into what I am already calling my Top 50 list. It is less explosive than some choices but delivers quality growth, which deserves a place in any portfolio.