Readers of this space know that my investment bias is toward large-cap companies with demonstrated business models that have a competitive advantage in established markets, preferably with a favorable global trend as a support. And with the aforementioned in mind, Caterpillar is worth a review.

Caterpillar (NYSE: CAT) is the world's No. 1 manufacturer in earth moving equipment and a leader in construction/agricultural equipment.

In general, analysts see CAT's 2008 revenue increasing 7-10% on strong international growth; North American revenue is expected to be flat.

Analysts also like the fact that Caterpillar is well-positioned to secure new business in emerging market economies for construction, infrastructure and land development work.

Meanwhile, raw material / core component costs are expected to continue to rise, limiting margin growth. The Reuters F2008/F2009 EPS consensus estimates for CAT are $6.02/$6.77.

Further, CAT's U.S. business, like the U.S. economy, is expected to remain sluggish through 2008, weighed-down by the housing sector's worst recession in more than 15 years. The best scenario has CAT's residential business bottoming late in 2008; the worst, in mid-2009. If it's the former, that adds to the argument to scoop up CAT's shares now, before buy-side institutional demand increases.

The risks? Analysts are keeping an eye on Caterpillar's product mix. A sustained, substantial global economic slowdown would also (obviously) hurt CAT's results.

The First Call mean rating for CAT is: Buy [18 firms]. Mean 2008 target: $87 [high: $106, low: $67].

Stock Analysis: Caterpillar is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from CAT's shares. Sell / Stop Loss if you were to purchase shares in this company: $63.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.