Caterpillar Stock Could Crawl Back Toward Record

Caterpillar Inc (NYSE:CAT) stock is down 1% to trade at $428.09 at last check, but still sports a healthy a 21.9% year-over-year lead. The equity is bouncing off a familiar floor at the $400 region after a failed attempt to conquer its July 31 all-time high of $441.15. Better yet, the shares are flashing a historically bullish signal that could bring them back toward that record.

More specifically, Caterpillar stock's recent peak comes amid low implied volatility (IV), per its Schaeffer's Volatility Index (SVI) of 23%, which ranks in the 20th percentile of its annual range. This has occurred seven other times over the past five years, after which CAT was was higher one month later 57% of the time, averaging a 3% gain. From its current perch, a similar move would place CAT above $440, just shy of those record highs.

Analysts already lean bullish toward Caterpillar stock, but there is still room for bull notes. Of the 22 analysts in coverage, 10 still carry a tepid "hold" or worse rating, while the 12-month consensus target price of $439.27 is only a slim 2.6% premium to current levels.

Options look like an excellent way to bet on the equity's next moves. per its Schaeffer’s Volatility Scorecard (SVS) that ranks high at 88 out of 100. In other words, CAT has tended to exceed volatility expectations in the past year -- a boon for options buyers.