Given increasing food prices and the reopening of construction activities, the demand for farm and heavy construction machinery is on the rise. We believe the growing demand should benefit Deere (NYSE:DE), AGCO (AGCO), Oshkosh (NYSE:OSK), Terex (NYSE:TEX), and Alamo Group (NYSE:ALG) significantly in the near term because they possess efficient and innovative product portfolios and strong fundamentals. So, let’s pore over these names.The growing demand for food products is incentivizing farmers to buy advanced farm equipment and focus on smart farming solutions to achieve better crop yields. Low borrowing costs and debt relief to farmers promised in the approved U.S. budget resolution should enable farmers to buy or replace farm equipment to reduce their production costs and ease operations. The reopening of construction activities is also driving the demand for farm and heavy construction machinery.
This growing demand has propelled companies to manufacture efficient, eco-friendly, heavy construction machinery despite supply chain constraints and rising input costs. Also, the Senate’s passage of the $1 trillion bipartisan infrastructure bill will likely favor the growth of companies that manufacture heavy machinery.
So, we think it could be wise to bet on Deere & Company (DE), AGCO Corporation (AGCO), Oshkosh Corporation (OSK), Terex Corporation (TEX), and Alamo Group Inc . (ALG). They have the potential to capitalize on the industry tailwinds and deliver solid returns in the near-term. Each of these stocks is rated B (Buy) in our proprietary POWR Ratings system.