The story on Wall Street that’s got everyone worked up one way or the other is the recent profits at Goldman Sacs and Bank of America. Some are pleased and view this as a telltale sign of a recovery. They look at these banks profits and argue that TARP is working.

Others view this recent quarter’s profits as outrageous. This group sees the greed and misuse of government funds to prop share prices and executive compensation at the banks.

While this debate enters its frenzy stage, another story is developing slightly below the radar. Surprisingly, no one seems to be talking about another earnings announcement at one of the most important companies in the U.S.: Caterpillar.

CAT announced a second-quarter profit of 60 cents per share. Analysts expected just 22 cents per share — just a third of what the company actually produced. Of course, 60 cents is miniscule compared to just last year. The company’s Q2 2008 EPS was $1.74. But you need to look at the wider view…

Caterpillar is the crown jewel of American industry. It represents the engine of the blue-collar world – at least in the U.S. CAT makes everything from bulldozers – needed for nearly every road and construction project in the country – to turbines – needed to keep the lights on in the U.S.

The company’s customer base reaches from Canada to Indonesia… from China to Chile. There’s almost no developed or even developing country in the world that doesn’t show Caterpillar some business.

So what does this quarter’s profits mean for CAT, the U.S., and the rest of the world? It means, that either the stimulus plans worldwide are starting to work or we are turning a corning on this recession… or both.

We’re not calling for the recovery to start now, and we certainly aren’t calling for the bottom of the market. But we are pointing out the number one indicator. We’ll know when the economy is back on track, when Caterpillar starts performing like years past.

For us small-cap investors, profiting from CAT’s story is even easier. You see, CAT may be the world’s largest industrial machine manufacturer. But it’s not the only one. There are plenty of smaller, but just as lucrative, companies that make plenty of money in this field.

The first one that you should keep an eye on is Manitowoc Co. (NYSE: ). Until this recession, Manitowoc was on a very impressive pace. The company, which also manufactures machinery like lifts and cranes, brought in nearly $66 million in 2005, $166 million in 2006, and a whopping $337 million in 2007.

Then the economy went sour. Projects were locked up because of funding. Customers quit building — therefore eliminating the need for Manitowoc’s products.