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(Reuters) – Caterpillar Inc (NYSE: ) expects to report higher sales at its energy- and mining businesses on Thursday. The rise in commodity prices, caused by the war in Ukraine could help to boost the company’s image as an inflation hedge.

Global rerouting of energy flow has proved costly to gas-intensive businesses. Commodity inflation also increased input costs.

However, with the United States and Europe vowing to cut off Russian oil and gas, crude prices for this product shot up to $127.98 per barrel in March. U.S. West Texas Intermediate crude (WTI), peaked at $123.70.

“[Before the war]”There was a misperception that CAT was not positioned well since mining, oil, or gas were not growth industries,” Stephen Volkmann, senior machine analyst at Jefferies. We have learnt that it is important to supply basic and transition fuels.

This is the Illinois-based maker of construction and mining equipment that has seen a dramatic increase in crude materials and oil prices.

Spending by the oil and mining industries to increase their machine fleets is increasing as well as drilling activity. Refinitiv’s IBES data shows that Caterpillar will see a jump in revenue of 12%, to $13.35 Billion.

Tami Zakaria, a J.P. Morgan analyst said that CAT could be considered a net beneficiary due to material cost inflation. She stated in a note.

Caterpillar shares have historically been influenced by an inflation spike and a rise in commodity prices. This has helped to boost investor confidence in this blue-chip stock. The March share price rose 19%

Caterpillar has long been viewed as an inflation hedge, said Noah Kaye, senior research analyst at Oppenheimer & Co Inc. “Their segments that typically see the highest incremental margins ()The segments where they have the largest number of mining companies houses.”

Caterpillar, like many industrial companies, may experience some margin compression due to labor shortages and long-term supply chain restrictions.

Caterpillar increased prices last year to compensate for rising input costs. Now, “investors are going to be looking for little margin improvement because of those pass through costs,” said analyst Brian Langenberg of research firm Langenberg & Company.