Caterpillar's quarterly earnings report was the "most serious beat and raise" of the earnings season, and the stock will continue to climb, CNBC's Jim Cramer said Tuesday.
Shares of the construction machinery maker jumped Tuesday after it reported better-than-expected second-quarter earnings before the bell. The stock was nearly 5 percent higher at the open, trading around $113 per share. Dow futures climbed 100 points after the announcement.
In the earnings report, Caterpillar said it's raising its full-year guidance to $5.00 per share, from its previous outlook of $3.75 per share, as "disciplined" costs in the first half of the year allow new room for investment.
"This stock will not stop at $113. There will be some bears who will try to say, 'Wait a second. China's not that strong.' They'll try to hold it down. But in the end, this beat and raise is the most serious beat and raise of the earnings season. Stock goes higher," Cramer said on "Squawk on the Street."
The company's results underscore a turnaround in its main businesses that have been hit by low commodity prices and slowing demand in the past few years. Despite gridlock, U.S. industrial companies are expected to gain from President Donald Trump's proposed infrastructure spending and tax reform.
Cramer said he was "shocked" that Caterpillar had this level of earnings power, and called the leverage on its sales "extraordinary."
"When you're talking about construction equipment coming back without an infrastructure bill. When you talk about favorable price realization for energy without oil above $50. How many people did these guys get rid of? I mean this is an incredible streamline cat," Cramer said.
He continued, "Caterpillar is back much harder than I thought."
On Tuesday, the S&P 500 hit a record high shortly after the open on strong earnings reports. The Dow rose 150 points, with Caterpillar contributing the most gains.
— Retuers and CNBC's Michael Sheetz contributed to this report.