4 Construction & Mining Equipment Stocks to Watch Amid Industry Woes

Industry Overview - The Zacks Manufacturing - Construction and Mining industry is currently facing challenges due to a prolonged contraction in the manufacturing sector, although there has been a recent uptick in activity [1][4] - The industry comprises companies that manufacture and sell construction, mining, and utility equipment, supporting various sectors including oil and gas, power generation, and infrastructure projects [3] Current Trends - Increased infrastructure investment in the U.S. and demand from the mining sector, driven by the energy transition trend, are expected to support the industry [2][5] - The manufacturing index saw a modest increase to 50.9% in January 2025 after 26 months of contraction, but concerns over new tariffs could disrupt this recovery [4] - Companies are focusing on pricing strategies and cost-reduction actions to sustain margins amid input cost inflation [6] Technological Advancements - Industry participants are investing in digital initiatives such as AI, cloud computing, and robotics to enhance productivity and efficiency [7] - Companies are also focusing on developing technologically advanced products to meet the demands of the energy transition and improve customer satisfaction [2][7] Market Performance - The Manufacturing - Construction and Mining industry has outperformed the sector with a growth of 13.3% over the past year, compared to the sector's growth of 11.9% [11] - The industry's current forward 12-month EV/EBITDA ratio is 10.92, lower than the S&P 500's 13.96 and the Industrial Products sector's 19.85 [13] Company Highlights - Caterpillar Inc. (CAT): Ended 2024 with a backlog of $30 billion, benefiting from infrastructure spending and energy transition trends. The company plans to double its service revenues from$14 billion in 2016 to $28 billion in 2026 [15][16] - Komatsu (KMTUY): Experiencing higher demand for mining equipment and focusing on technological innovations for carbon neutrality by 2050. The company has gained 13.3% in the past six months [20][21] - Hitachi Construction Machinery (HTCMY): Aiming for revenues of over 300 billion JPY in fiscal 2025, focusing on value-chain businesses and digital technologies [22][23] - Hyster-Yale, Inc. (HY): Implementing strategies for profitable growth, with expectations for improved production levels in 2026 and a focus on cash generation [25][26]