Construction machinery stocks have trailed the S&P 500 by about 20% over the last year due to a variety of factors, including trade deals with China and the current state of unfavorable farming conditions. But despite these setbacks, data shoes that the global construction equipment industry is set to reach $90 billion this year, up from $70 billion in 2016. The same data shows that overall construction spending, which was at $1.3 trillion in 2019, will reach $1.45 trillion in 2023.
Construction machinery is expected to see a lift due to a recent congressional bill that allocates $760 billion in government infrastructure spending over the next five years, focusing on roads and bridges, as well as sustainability projects.
Caterpillar, which controls 17% of all construction equipment spending, saw a downturn in early 2019 but is rebounding well, growing 5% over the year.
Deere & Company, which makes equipment primarily for agriculture, construction and forestry, is adding value, according to Investopedia. Although earnings per share will be down slightly from what was projected, the $51 billion tractor maker has outperformed the industry by 1.43%.
Finally, Manitowac Company, which provides lifting equipment, a 118 year old crane company, was recently downgraded by Goldman Sachs from “Buy” to “Sell” saying that the company has slumped 13% so far in 2020.