4 Farm & Heavy Construction Machinery Stocks to Buy for the Long Haul

NYSE: CAT | Caterpillar, Inc.  News, Ratings, and Charts

CAT – As the need to modernize farm infrastructure continues to rise, we think it could be wise to bet on fundamentally sound farm and heavy construction machinery stocks Caterpillar (CAT), CNH Industrial (CNHI), Terex (TEX), and REV Group (REVG). We think these stocks have the potential to generate significant returns over the long term. So, let’s discuss them.

The heavy construction machinery industry plays a vital role in constructing mechanical irrigation systems, heavy tractors, and other equipment for the farming industry. Since the onset of the COVID-19 pandemic, the farm and  heavy construction machinery sector has suffered huge losses. But with heightened demand for farm mechanization, the industry is now expanding due to the integration of advanced technologies and growing food demand.

More than 80% of AEM members anticipate rising demand for construction and agriculture equipment over the next year. Furthermore, the U.S. infrastructure bill is expected to significantly boost the industry’s growth because it promises a better and more modernized farming industry. According to a Research and Markets report, the global agricultural machinery market is expected to grow at a 5.4% CAGR  through 2026.

Thus, we think it could be wise to add quality farm and heavy construction machinery stocks Caterpillar Inc. (CAT), CNH Industrial N.V. (CNHI), Terex Corporation (TEX), and REV Group, Inc. (REVG) to one’s portfolio now.

Caterpillar Inc. (CAT)

CAT, which is headquartered in Peoria, Ill., manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. Its segments are Construction Industries; Resource Industries; Energy & Transportation; Financial Products, and Other Operating.

On November 10,  CAT announced a strategic alliance agreement with Newmont Corporation, the world’s largest gold mining company, to deliver a fully connected, automated, zero carbon-emitting, end-to-end mining system. Jim Umpleby, Chairman and CEO of Caterpillar Inc., said, “We share Newmont’s dedication to a reduced-carbon future, and we’re honored to work together on this industry-leading effort.”

CAT’s total sales and revenues came in at $12.4 billion for its fiscal third quarter, ended September 30, 2021, up 25.5% year-over-year. Its operating profit was $1.66 billion, up 68.9% year-over-year. And its profit increased 113.5% year-over-year to $1.43 billion.

For its fiscal 2021, analysts expect CAT’s revenue to increase 20.7% to $50.4 billion. Its EPS is estimated to increase 58.5% to $10.4 in the current year. It surpassed the EPS estimates in each of the trailing four quarters. The stock has gained 10.5% in price over the past year to close yesterday’s trading session at $201.28.

CAT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

CAT has a B grade for Value and Sentiment. It is ranked #19 of 78 Industrial – Machinery stocks. Click here to see the additional POWR Ratings for Growth, Momentum, Stability, and Quality for CAT.

Note that CAT is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.

CNH Industrial N.V. (CNHI)

London-based CNHI designs, produces, markets, sells, and finances agricultural and construction equipment, commercial vehicles, and specialty vehicles internationally. The company operates through five segments: Agriculture; Construction; Commercial and Specialty Vehicles; Powertrain; and Financial.

On December 2, 2021, CNHI announced its acquisition of NX9. A software suite that delivers ISOBUS core technologies and applications for agricultural equipment and  related intellectual property rights. Parag Garg, Chief Digital Officer at CNH Industrial, said, “We are eager to build upon our existing capabilities and put the NX9 team’s expertise to work, contributing to our overall strategy to benefit and serve our customers and dealers productively and effectively.”

For the third quarter, ended September 30, 2021, CNHI’s total revenues increased 22.8% year-over-year to $7.97 billion. The company’s adjusted net income increased 217.9% year-over-year to $496 million. Also, its adjusted EPS came in at $0.36, up 227.3% year-over-year.

CNHI’s revenue is expected to be  $29.39 billion in its fiscal 2022, representing a 6.2% year-over-year rise. In addition, the company’s EPS is expected to increase 12.5% year-over-year to $1.26 in the next year. Over the past year, the stock has gained 53% in price to close yesterday’s trading session at $17.49.

CNHI has an A grade for Value. It is ranked #34 in the Industrial – Machinery industry. Click here to see the additional POWR Ratings for CNHI (Growth, Stability, Sentiment, Momentum, and Quality).

Terex Corporation (TEX)

TEX manufactures and sells aerial work platforms and materials processing machinery. It operates through two segments: Aerial Work Platforms and Materials Processing. In addition, it offers financing solutions to assist customers in the rental, leasing, and acquisition of its products. TEX is based in Westport, Conn.

On October 28, 2021, Terex Chairman and CEO John L. Garrison, Jr. said, “End-market demand remains exceptionally strong, demonstrated by significant year-over-year growth in orders, backlog, and a robust book-to-bill ratio. Our ability to meet this high level of demand is constrained by supply chain, labor, freight, and logistics challenges. We are driving our suppliers on availability and cost to reduce the impact on our customers and distributors.”

For the third quarter, ended September 30, 2021, TEX’s net sales increased 29.8% year-over-year to $993.8 million. The company’s gross profit came in at $178.5 million, up 22% year-over-year. Its net income was  $48.1 million, up 729.3% year-over-year, while its EPS increased 750% year-over-year to $0.68.

Analysts expect TEX’s EPS to come in at $2.81 in the current year, representing a 2,061.5% year-over-year increase. The company’s revenue is expected to rise 25.3% year-over-year to $3.85 billion in its fiscal 2021. It surpassed the EPS estimates in three of the four trailing quarters. Over the past year, the stock has gained 27.2% in price to close yesterday’s trading session at $44.02.

TEX’s POWR Ratings reflect solid prospects. The company has an overall B rating, which equates to a Buy in our proprietary rating system.

In addition, it has an A grade for Value and a B grade for Growth. TEX is ranked #18  of 53 stocks in the Industrial – Building Materials industry. Click here to see the additional POWR Ratings for TEX (Stability, Quality, Sentiment, and Momentum).

REV Group, Inc. (REVG)

REVG designs, manufactures, and distributes specialty vehicles, and related aftermarket parts and services in the United States, Canada, Europe, Africa, and internationally. It operates through three segments: Fire & Emergency; Commercial; and Recreation. RVG is based in Milwaukee, Wisc.

On August 31, 2021, Collins Bus, a subsidiary of REVG, and Lightning eMotors, Inc. (ZEV), announced a strategic partnership to manufacture and deploy zero-emission, all-electric Type A school buses. Brian Perry, president, REV Commercial Segment, said, “In addition to being clean, green, and sustainable, electric school buses are quiet, efficient, and much less expensive to maintain. We’re pleased to be working with Lightning eMotors to provide districts with the all-electric buses their students, drivers, and communities want.”

REVG’s net sales for its fiscal third quarter, ended July 31, 2021, came in at $593.3 million, up 1.9% year-over-year. Its gross profit increased 15.2% year-over-year to $76.6 million. Furthermore, its net income was $23.7 million, compared to a $3.6 million net loss.

REVG’s revenue is expected to increase 9.3% year-over-year to $2.59 billion in its fiscal 2022. Its EPS is estimated to grow 693.3% year-over-year to $1.19 in the current year. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 63.1% in price to close yesterday’s trading session at $16.15.

REVG has an overall B rating which translates to a Buy in our POWR Ratings system. Moreover, it has a B grade for Growth, Value, and Quality.

It is ranked #5 of 65 stocks in the Auto & Vehicle Manufacturers industry. Click here to check additional ratings for REVG (Momentum, Stability, and Sentiment).

Click here to check out our Automotive Industry Report for 2021


CAT shares were trading at $204.69 per share on Tuesday morning, up $3.41 (+1.69%). Year-to-date, CAT has gained 14.80%, versus a 26.33% rise in the benchmark S&P 500 index during the same period.


About the Author: Riddhima Chakraborty


Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...


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