Terex Corporation (TEX), Manitowoc Company, Inc. (MTW): Which Is a Better Investment, E&C or Machinery?

Manitowoc Company, Inc. (NYSE:MTW) is expected to benefit from cyclical upside and margin improvement

For Manitowoc Company, Inc. (NYSE:MTW), a combination of a continuing (and maturing) rebound in crane markets, steady improvements in food service, and significant debt pay-down could drive earnings materially higher over the next couple of years. There is a high confidence level in a continuing recovery in Manitowoc Company, Inc. (NYSE:MTW)’s primary crane markets (both in rising orders and margin). The higher-margin large crawler crane demand is picking up, and combined with some fleet rationalization from crane rental companies and company-specific actions to control cost, should allow Manitowoc Company, Inc. (NYSE:MTW) to meet or beat investor expectations for 2013 and beyond.

Self-help and core growth is expected in Terex Corporation (NYSE:TEX)

Terex Corporation (NYSE:TEX) was recently upgraded by Barclays PLC (ADR) (NYSE:BCS) to buy. Barclays PLC (ADR) (NYSE:BCS) sees good opportunity for continued share appreciation. Terex Corporation (NYSE:TEX) has good “self help” potential and has demonstrated solid progress toward its goals of better execution, margin improvement, and debt pay-down. Combined with more realistic near-term expectations relative to its European exposure, Terex Corporation (NYSE:TEX) seems to be well positioned to drive further core earnings growth given continued strength in its Aerial Work Platform (AWP) business and still-improving crane fundamentals led by a pickup in energy and infrastructure activity.

Final word

Many investors have significant trepidation to invest in the E&C space. Generally, machinery is viewed as a higher quality/more investment-worthy sector. After boiling the debate down to the most discussed issues – cyclical upside, valuation, margin improvement, core growth, and “self help,” E&C interestingly appears to be the more attractive sector in three of the five categories.

Zain Abbas has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Zain is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Which Is a Better Investment: E&C or Machinery? originally appeared on Fool.com is written by Zain Abbas.

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