Why CAT is no longer a dog

Why CAT is no longer a dog
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After sliding 26 percent in 2015, making it the second-worst performer in the Dow Jones industrial average, Caterpillar has surged 30 percent in 2016 to become the Dow's top dog.

The machinery and equipment giant has been one of many companies to suffer alongside commodities price, but as oil and gold have rebounded in 2016, so has mining supplier Caterpillar. And over the past two days, the stock has risen about 7 percent, thanks to a major oil bounce on the back of OPEC's agreement to cut production.

In addition to the commodity comeback, Longbow Research Eli Lustgarten says that the stock's surge in 2016 is due to "accelerated restructuring as well as the company downsizing to a new reality."

Lustgarten rates the company a hold, with the pressure of very weak earnings and instability mitigating his enthusiasm.

Indeed, a large majority of analysts have hold ratings, according to FactSet, with the average price target substantially below the stock's current price.

But some technical analysts are getting excited about the name. Now that the stock has broken about the $84 level that Evercore ISI technical analyst Rich Ross said served as "resistance," Ross says the stock presents an attractive buying opportunity.

Many look to the Dow's worst performers in a given year to outperform in a next, in what is sometimes referred to as the "dogs of the Dow" theory. With commodity moves serving as a big tailwind, Caterpillar is proving to be a remarkable example of a former dog made good.