Caterpillar 20

Luke Sharrett | Bloomberg | Getty Images

Caterpillar Inc. rental hydraulic excavators sit at the Whayne Supply Co. dealership in Lexington, Kentucky, U.S., on Monday, Oct. 17, 2016.

Investors should buy Caterpillar shares because its mining business will surge in 2018 as customers scramble to replace aging equipment in the face of greater demand, according to Barclays, which raised its rating on the company to overweight from equal weight.

"CAT revenues are at unprecedented lows, relative to company history and to global GDP. Several of its end markets are now getting due for recovery, notably mining aftermarket, mining replacement and China construction, " analyst Robert Wertheimer wrote in a note to clients Tuesday. "CAT has close to a decade of upside from replacement and recovery of different markets over time."

The company's shares are up more than 40 percent in the past year on growing optimism from recovering commodity prices.

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