The industrial heavy equipment market includes machinery and tools used in construction, mining, agriculture, and industrial applications. According to 360iResearch, this sector is critically important for infrastructure development, mining operations, and large-scale agricultural productivity.
Growing infrastructural developments, rapid urbanization, and the growth of mining activities are fueling the necessity for heavy equipment. In agriculture, improved machinery efficiency remains critical for meeting global food demands. As per 360iResearch, market growth continues to be influenced by technological advancements like automation, loT integration, and sustainability trends focusing on fuel-efficient and electrically powered machinery.
Growth Drivers for the Heavy Equipment Market
Research Nester believes that the autonomous heavy equipment market was worth more than US$11.43 million in 2024 and should surpass US$26.56 million by 2037. The primary growth driver for the rapid expansion is the strong growth projected in the construction industry. The growth in the building and construction industry is aligned with the demand for heavy equipment.
Market experts opine that growth in the construction industry is expected to stem from lower interest rates in 2025. The types of heavy equipment that are used in the construction industry include earthmoving equipment, and material construction industry, among others.
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Key Trends to Look Out For in 2025
As per Stumble Forward, the industrial machinery landscape has been witnessing a massive transformation. Technological advancements are taking place at a rapid pace, with manufacturers adopting cutting-edge tools and processes to beat the competition. Increased automation and robotics, Al integration, green manufacturing, and 3D printing for customization are the key trends likely to drive growth for the industrial machinery industry in 2025.
Automation in industrial machinery tends to reduce the chances of human error and supports streamlining production. Robots, together with machine learning, are being employed to inspect, assemble, and even pack goods. Stumble Forward went on to add that Al-powered systems can predict equipment failures, reducing unexpected costly repairs. This predictive maintenance technology should continue to help industries save thousands of dollars in repair costs.
In 2025, industrial machinery is expected to be designed in a way that will promote sustainability. Energy-efficient machines, including those running on renewable energy, or producing less waste, will be adopted. Finally, the adoption of 3D printing in industrial machinery, which can help produce parts that are lightweight yet incredibly strong, is expected to grow as manufacturers continue to realize its importance. Stumble Forward also added that the ability to print intricate designs should result in innovation, enabling engineers to test prototypes and adjust accordingly.
A large open-pit copper mine with heavy machinery extracting minerals from the earth.
Our Methodology
To list the 10 Best Heavy Equipment and Industrial Machinery Stocks to Buy, we used a screener and sifted through online rankings. After getting a list of 25-30 stocks, we filtered out the ones having high hedge fund holdings. Finally, the stocks are arranged in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Heavy Equipment and Industrial Machinery Stocks to Buy
10) The Manitowoc Company, Inc. (NYSE:MTW)
Number of Hedge Fund Holders: 11
The Manitowoc Company, Inc. (NYSE:MTW) is a diversified industrial manufacturer of cranes and related products.
The Manitowoc Company, Inc. (NYSE:MTW) continues to strategically emphasize non-new machine sales, which comprise aftermarket parts, services, rentals, used cranes, and digital solutions, in a bid to drive sustainable growth and mitigate the cyclical nature of the crane market. This focus remains critical to their CRANES+50 strategy, aiming to achieve $1 billion in non-new machine sales and enhance profitability.
Wall Street analysts remain optimistic about The Manitowoc Company, Inc. (NYSE:MTW)’s focus on non-new machine sales. They believe that expanding non-new machine sales should create more stable, recurring revenue streams, and this will also reduce reliance on new equipment sales. Finally, it will also lessen the impact of market volatility. Moreover, aftermarket services and rentals typically yield higher margins, contributing to overall profitability.
While aftermarket parts and services focus on providing maintenance, repairs, and parts to extend equipment lifespan and ensure optimal performance, equipment rentals focus on offering rental options to address customer needs without requiring full ownership.
During Q3 2024, The Manitowoc Company, Inc. (NYSE:MTW) made good progress on its CRANES+50 strategy, while non-new machine sales reached a new high of $617.5 million for the trailing twelve months. This further reflects the successful execution of their strategy.
9) Lindsay Corporation (NYSE:LNN)
Number of Hedge Fund Holders: 12
Lindsay Corporation (NYSE:LNN) offers water management and road infrastructure products and services in the US and internationally.
Lindsay Corporation (NYSE:LNN) plans to tap growth opportunities in its infrastructure segment and in the Middle East and North Africa (MENA) region. Notably, an $80 million project in the MENA region should contribute to 2025 revenues, with $14 million already shipped in Q4 2024. The company’s infrastructure segment, mainly its Road Zipper business, continues to gain momentum with federal funding support. This business involves movable barriers designed to enhance road safety and traffic management. The increased adoption of these systems demonstrates a broader recognition of their benefits in improving traffic flow and safety, contributing to the segment’s revenue growth.
In June 2024, Lindsay Corporation (NYSE:LNN) announced a multi-year supply agreement to provide Zimmatic™ irrigation systems and FieldNET™ remote management technology in the MENA region. The project, valued at over $100 million in revenue, is the largest in the company’s history and is part of a broader strategy to support localized food production in the region.
Zimmatic™ irrigation systems are designed to provide innovative and efficient solutions for agricultural irrigation. FieldNET™ is an advanced remote management and scheduling technology focused on enhancing irrigation efficiency and streamlining farm operations.
8) AGCO Corporation (NYSE:AGCO)
Number of Hedge Fund Holders: 18
AGCO Corporation (NYSE:AGCO) manufactures and distributes agricultural equipment and related replacement parts worldwide.
AGCO Corporation (NYSE:AGCO)’s product portfolio, consisting of tractors and combines, continues to experience varying levels of market sentiment. Wall Street believes that dealers have been quite reluctant to place new orders. This momentum might have a trickle-down effect on other product lines, weighing 4WD tractors over the upcoming 6 – 9 months. However, in a bid to address these challenges, AGCO Corporation (NYSE:AGCO) announced a significant 25% planned production cut for Q4 2024. This decision is expected to align production with current market demand and manage inventory levels effectively.
Furthermore, AGCO Corporation (NYSE:AGCO) remains focused on European developments, mainly regarding pricing strategies and potential market share gains. Such initiatives are expected to provide avenues for growth.
The company’s growth strategies include Fendt brand expansion, precision agriculture, and parts business. Fendt is a brand under AGCO Corporation (NYSE:AGCO) and is a leading manufacturer of high-performance agricultural machinery. Products include tractors, harvesters, and loader wagons, among others. Fendt’s improved distribution and technology-rich product line continues to translate into improved market share, mainly in Europe.
AGCO Corporation (NYSE:AGCO) continues to work to expand Fendt’s market share beyond its stronghold in Europe. This includes increasing dealership networks in the US and Canada and targeting growth in emerging markets such as Brazil, India, and China, where demand for modern agricultural machinery continues to rise.
7) CNH Industrial N.V. (NYSE:CNH)
Number of Hedge Fund Holders: 24
CNH Industrial N.V. (NYSE:CNH) is a global leader in the industrial sector specializing in machinery and construction equipment.
The agricultural cycle that CNH Industrial N.V. (NYSE:CNH) is entering provides a strong growth potential. Agricultural cycles tend to bring higher demand for farming equipment and machinery, which aligns well with the company’s product portfolio. This cyclical upturn is expected to drive higher sales volumes and potentially improve pricing power for its agricultural products.
As per analysts, CNH Industrial N.V. (NYSE:CNH) is expected to benefit from higher-than-previous-cycle incremental margins and earnings. Therefore, the company is well-positioned to capitalize on the agricultural cycle’s momentum. The potential for expanded margins is expected to result in improved profitability and cash flow generation, offering resources for further investment in product development or market expansion.
Also, billionaire investor David Einhorn believes that CNH Industrial N.V. (NYSE:CNH) can increase its earnings to $2 per share or more during the next upcycle. This is expected to be fueled by higher crop prices. When crop prices rise, the farmers earn more revenue, improving their purchasing power. This often leads to increased investment in capital equipment, benefiting CNH Industrial N.V. (NYSE:CNH). Apart from this, a strong agricultural market will provide flexibility to the company to raise equipment prices, driving revenues.
Ariel Investments, an investment management company, released its Q4 2023 investor letter. Here is what the fund said:
“We found an attractive entry point for London based, agriculture machinery manufacturer, CNH Industrial N.V. (NYSE:CNHI), as shares are currently pricing in multi-year declines similar to the slope of the last agricultural downcycle (2014- 2016). Although farm incomes have begun to moderate and will likely translate to lower machinery purchasing in 2024, our analysis of U.S. farm fundamentals suggests the severity and longevity of the next downcycle will likely be shallower and shorter in duration. Additionally, CNHI remains on track to deliver on previously articulated operational efficiency and cost savings targets, which should drive margin improvement and profitability growth over the near to medium term. Looking ahead, we believe the industry will benefit from precision agriculture.”
6) Blue Bird Corporation (NASDAQ:BLBD)
Number of Hedge Fund Holders: 25
Blue Bird Corporation (NASDAQ:BLBD) designs, engineers, manufactures, and sells school buses in the United States, Canada, and internationally.
Blue Bird Corporation (NASDAQ:BLBD)’s commitment to EV production is the cornerstone of its growth strategy. The EV initiative continues to play a critical role in bolstering the company’s EBITDA momentum, together with other industrial factors like pricing, volume, and cost management. Wall Street opines that Blue Bird Corporation (NASDAQ:BLBD) remains well-positioned to capitalize on the growing demand for electric school buses.
With school districts across the US increasingly prioritizing environmentally friendly transportation options, Blue Bird Corporation (NASDAQ:BLBD)’s early entry into the EV market should prove to be a significant competitive advantage.
As per the World Resources Institute, the total number of electric school buses should continue to grow under a $1 billion fourth round of Clean School Bus Program funding announced in September 2024, and the EPA’s new Clean Heavy Duty Vehicles Grant Program, which has been established under the Inflation Reduction Act of 2022 and focuses on transitioning heavy-duty vehicles (including school buses) to zero-emission models.
Blue Bird Corporation (NASDAQ:BLBD) released its full-year results for fiscal 2024. Its EV backlog grew to a record level of ~630 buses, worth approximately $200 million. This was driven mainly by the ramp in orders from rounds 2 and 3 of the EPA’s Clean School Bus program. Apart from providing revenue visibility, it also reflects healthy market demand and significant growth in EV orders.
5) PACCAR Inc (NASDAQ:PCAR)
Number of Hedge Fund Holders: 30
PACCAR Inc (NASDAQ:PCAR) designs, manufactures and distributes light, medium, and heavy-duty commercial trucks.
Wall Street analysts believe that PACCAR Inc (NASDAQ: PCAR)’s growth prospects are expected to be fueled by an increase in emission pre-buy activities. An emission pre-buy is a phenomenon in which truck buyers accelerate purchases of vehicles ahead of the implementation of stricter emission regulations. The majority of PACCAR Inc (NASDAQ:PCAR)’s trucks are equipped with engines from Cummins, placing it to potentially capitalize on regulatory changes.
Cummins is a leader in developing engines that meet or exceed stringent global standards. By equipping trucks with Cummins engines, PACCAR Inc (NASDAQ:PCAR) ensures that its vehicles remain compliant. Also, PACCAR Inc (NASDAQ:PCAR) made some significant moves. It announced the sale of its subsidiary, PACCAR Winch Inc., to a wholly-owned subsidiary of Black Phoenix Group. This move forms part of the company’s ongoing efforts to optimize its portfolio and enhance shareholder value. This transaction aligns with the broader industry trend of companies emphasizing their core competencies and growth opportunities.
PACCAR Inc (NASDAQ:PCAR)’s core areas include trucks, parts, and emerging technologies such as electric and autonomous vehicles. Madison Investments, an investment advisor, released its Q3 2024 investor letter. Here is what the fund said:
“The bottom five detractors for the quarter were Dollar Tree, MKS Instruments, PACCAR Inc (NASDAQ:PCAR), Copart, and Amphenol. After initially holding up well against declining freight rates and a softening economic backdrop, sales at truck manufacturer PACCAR have begun to weaken. We think the company’s high-margin, stable aftermarket parts division will offer some support through the current cyclical downturn.”
4) Oshkosh Corporation (NYSE:OSK)
Number of Hedge Fund Holders: 33
Oshkosh Corporation (NYSE:OSK) offers purpose-built vehicles and equipment worldwide. It operates through 3 segments: Access, Defense, and Vocational segments.
Oshkosh Corporation (NYSE:OSK) completed the acquisition of AUSA, a manufacturer of telehandlers, dumpers, and forklifts, improving its specialty equipment offerings. The company believes that the deal will ramp up its growth strategy and strengthen JLG’s equipment portfolio. Oshkosh Corporation (NYSE:OSK) owns JLG Industries, Inc., which is a manufacturer of mobile elevating work platforms (MEWPs) and telehandlers.
Oshkosh Corporation (NYSE:OSK)’s acquisition of AUSA should enhance JLG’s line of telehandlers and complement its line of tracked dumpers and forklifts. Apart from this, the acquisition provides Oshkosh Corporation (NYSE:OSK) access to niche markets.
Also, during Q3 2024, Oshkosh Corporation (NYSE:OSK) achieved a significant milestone as the US Postal Service (USPS) began placing its next-generation delivery vehicles, or NGDV, in service for last-mile delivery. This means that these vehicles are now actively being used to deliver mail and packages to customers as part of USPS’s daily operations. Beyond initial production, Oshkosh Corporation (NYSE:OSK) is expected to generate recurring revenue through parts, maintenance, and fleet management services for the USPS vehicles over their operational life. This provides strong revenue visibility for the company.
Aristotle Capital Management, LLC, an investment management company, released its Q2 2024 investor letter. Here is what the fund said:
Oshkosh Corporation (NYSE:OSK), a manufacturer of purpose‐built vehicles worldwide, was a main detractor during the quarter. Despite a decline in share price, the company has seen fundamental improvements and strong demand for its vehicles, including an increasing backlog of orders for fire trucks. As such, revenue for Oshkosh’s Vocational segment was up over 35% year‐over‐year. We believe this segment should be able to expand its margins, particularly as the company was awarded a contract to produce the “Next Generation Delivery Vehicle” for the U.S. Postal Service, which should begin to ramp up at the beginning of next year. This contract could generate in excess of $6 billion in revenue for the company. Furthermore, we continue to believe that Oshkosh is a high‐quality business that should be able to create innovative equipment and gain market share across segments. This includes its aerial work platforms as global safety standards increase around the world.
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.
2) Deere & Company (NYSE:DE)
Number of Hedge Fund Holders: 41
Deere & Company (NYSE:DE) is a global leader in agricultural, construction, and forestry equipment manufacturing.
As per Fortune Business Insights, the global agriculture equipment market size was valued at US$180.81 billion in 2023. This market is expected to grow from US$193.46 billion in 2024 to US$344.77 billion by 2032. These growth prospects offer a substantial opportunity for Deere & Company (NYSE:DE), mainly in lower- and middle-income countries, where agricultural practices are evolving rapidly.
Moreover, Deere & Company (NYSE:DE)’s continued investment in precision agriculture technology places it well as an industry leader in innovation. With farming becoming increasingly data-driven and automated, the company’s advanced equipment and software solutions should become increasingly attractive to farmers looking to maximize efficiency and productivity. Moreover, the trend of farm consolidation continues to drive larger agricultural operations to invest significantly in advanced machinery. This should create a favorable environment for Deere & Company (NYSE:DE)’s offerings.
Deere & Company (NYSE:DE)’s focus on developing integrated technology platforms that provide seamless connectivity and data analysis capabilities is expected to create a significant competitive advantage. By providing farmers with tools to optimize their operations, Deere & Company (NYSE:DE) might be able to command premium pricing and increase customer loyalty. This will ultimately lead to market share gains even in a competitive environment.
Parnassus Investments, an investment management company, released the Q2 2024 investor letter. Here is what the fund said:
“Deere & Company (NYSE:DE) stock dropped after the company released underwhelming fiscal second-quarter earnings and lowered its 2024 guidance. Although the company is going through an equipment demand downturn, we believe it will demonstrate better-than-expected through-cycle performance.”
1) Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 50
Caterpillar Inc. (NYSE:CAT) is engaged in manufacturing and selling construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives.
Caterpillar Inc. (NYSE:CAT)’s progress in autonomous technology, mainly in the aggregates sector, provides a significant long-term opportunity for growth. As it continues to develop and implement autonomous solutions, the company is expected to see increased demand from customers looking to improve safety and reduce operational costs.
In November 2024, Caterpillar Inc. (NYSE:CAT) successfully demonstrated the fully autonomous operation of its Cat® 777 off-highway truck at Luck Stone’s Bull Run Quarry in Virginia. This was the company’s first deployment of autonomous technology in the aggregates industry, hinting at its expansion into new sectors.
Wall Street believes that the demand for critical commodities such as copper and lithium should fuel Caterpillar Inc. (NYSE:CAT)’s long-term growth, and the company appears to be perfectly positioned to supply the machinery needed. It plans to ramp up engine production by 125% and its focus on innovations such as remote-controlled equipment and predictive maintenance highlights its commitment to meeting higher demand and driving growth.
Diamond Hill Capital, an investment management company, released its “Large Cap Strategy” third-quarter 2024 investor letter. Here is what the fund said:
“Other top Q3 contributors included HCA Healthcare and Caterpillar Inc. (NYSE:CAT). Heavy construction machinery manufacturer Caterpillar has held up better than industry peers against a challenging macroeconomic backdrop and a generally slowing construction environment.”
While we acknowledge the potential of CAT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than CAT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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