After a 51% rise in the stock price over the last year, (NYSE: CAT) investors have had a great year. However, management's guidance and Wall Street's analyst consensus suggest it may be about to pass a cyclical peak in earnings and cash flow.

For example, the Wall Street consensus calls for Caterpillar's sales to grow by less than 1% in 2024 and its earnings per share to be $21.27 compared to $21.21 in 2023. Those kinds of estimates usually spell trouble for a cyclical stock because investors often look to jump off board when the company's earnings momentum stalls.

That said, a Truist Financial analyst recently initiated coverage of the stock and set a $390 price target on it. That suggests the stock has a 14%-plus upside over the next 12 months or so if you believe the analyst's report. The analyst argues that infrastructure spending (led by the $1.2 trillion U.S. Infrastructure Investment and Jobs Act) as well as the ongoing transition to clean energy will boost the stock's earnings potential. Caterpillar's equipment plays a key role in the latter through mining machinery for metals like copper, which are essential for electric vehicles and renewable energy. In addition, its construction machinery helps build the infrastructure necessary to connect renewable energy to the grid.

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Source Fool.com