Caterpillar stock jumps to lead the Dow's gainers after Jefferies calls it a 'strong hedge' against commodity inflation

Shares of Caterpillar Inc. 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 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 have soared 73.9% and the Dow has slipped 8.0%.

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