10 Best Heavy Equipment and Industrial Machinery Stocks to Buy

3) Terex Corporation (NYSE:TEX)

Number of Hedge Fund Holders: 34

Terex Corporation (NYSE:TEX) manufactures and sells aerial work platforms and materials processing machinery worldwide. The company operates in 2 segments – Materials Processing (MP) and Aerial Work Platforms (AWP).

Wall Street opines that Terex Corporation (NYSE:TEX)’s growth is expected to be driven by its recent acquisition of ESG. ESG is financially accretive from day one. It should add ~$40 million in EBITDA in Q4 2024 for the period following the October 8 close. Terex Corporation (NYSE:TEX) expects to deliver at least $25 million in operational run-rate synergies by the end of 2026 and realize additional commercial opportunities as the company integrates ESG into Terex.

Terex Corporation (NYSE:TEX) increased the size and scope of its addressable markets by acquiring ESG in the broader waste and recycling industry. These are non-cyclical markets that have resilient growth trajectories. The company believes that ESG will drive increased revenue growth, free cash flow, EBITDA margin, and earnings per share accretion. The transaction will be double-digit percentage adjusted EPS accretive in 2025, with meaningful growth thereafter.

While ESG’s efficient operating model with low net working capital will drive a meaningful improvement in free cash flow accretion, its EBITDA margin including run-rate synergies is expected to add 140 basis points of margin accretion. Also, ESG’s product offerings, like Heil® refuse collection vehicles and Marathon® recycling equipment, provide Terex Corporation (NYSE:TEX) with a steady revenue stream from sectors less affected by cyclical construction markets.