We recently compiled a list of the 10 Best Heavy Equipment and Industrial Machinery Stocks to Buy. In this article, we are going to take a look at where CNH Industrial N.V. (NYSE:CNH) stands against the other heavy equipment and industrial machinery stocks.
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.
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).
A tractor plowing a field in the warm golden light of a setting sun.
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:CNH), 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.”
Overall CNH ranks 7th on our list of the best heavy equipment and industrial machinery stocks to buy. While we acknowledge the potential of CNH 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 CNH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
