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5 Mining and Construction Stocks to Buy for Stellar Returns

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The mining and construction industry is set to gain from the stepped-up infrastructure investment plan of the U.S. government and solid demand from the global mining sector, buoyed by the energy transition trend. Industry players are focusing on pricing actions and efforts to improve productivity and efficiency.

The intensifying global focus on shifting from fossil fuels to zero emissions will require a large number of commodities, which, in turn, will support demand for mining equipment in the years to come. The U.S. government's plans to increase investment in infrastructure construction, particularly in critical subsectors, such as transportation, water and sewerage, and telecommunications, should support demand in the coming years.

The industry participants are investing in digital initiatives like AI, cloud computing, advanced analytics and robotics. Digital transformation aids organizations in boosting productivity and increasing efficiency, reliability and safety, thereby enriching customer satisfaction. With the pressing need to cut carbon emissions, companies worldwide are relying more on autonomous machinery.

BlueWeave Consulting estimates the construction equipment market will witness a CAGR of 6% between 2022 and 2028, driven by the government’s infrastructure drive, evolving safety and security mandates and increased investment by both private and public spenders.

Grand View Research estimates that the global mining equipment industry to see a CAGR of 5.1% between 2023 and 2030, driven by rising demand for mineral resources, increased adoption of automation and digitization and increased focus on sustainability.

Moreover, the massive installation of 5G wireless projects has been a silver lining for the industry players. The increased demand from telecom customers for wireline networks, wireless/wireline converged networks and wireless networks using 5G technologies has been benefiting the industry players. Construction work for communications is expected to pick up on huge investments in network expansion.

Our Top Picks

We have narrowed our search to five mining and construction stocks. These stocks have strong potential for the rest of 2023 with positive earnings estimate revisions in the last 30 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks in the past three months.

Zacks Investment Research
Image Source: Zacks Investment Research

Caterpillar Inc. (CAT - Free Report) has seen year-over-year revenue and earnings growth for nine straight quarters thanks to its cost-saving actions, strong end-market demand and pricing actions that offset the impact of supply-chain snarls and cost pressures. We expect CAT’s adjusted earnings per share for 2023 to grow 20% and revenues to rise 8%.

Zacks Rank #1 CAT has an expected revenue and earnings growth rate of 11.6% and 37.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 6.1% over the last seven days.

Astec Industries Inc. (ASTE - Free Report) is gaining from strong demand and a record backlog, which will likely translate into higher sales in the current year. ASTE is witnessing robust demand across its Infrastructure Solutions and Material Solutions businesses as well as improved parts sales volume. ASTE’s OneASTEC business model will also help mitigate supply-chain and logistic disruptions.

Zacks Rank #1 Astec Industries has an expected revenue and earnings growth rate of 8.6% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.8% over the last seven days.

The Manitowoc Co. Inc. (MTW - Free Report) has been benefiting from pricing actions and efforts to cut down costs to negate the impact of higher costs and supply chain headwinds. In North America, demand from residential and non-residential construction will support MTW’s top-line growth. MTW continues to accelerate its investment in new product development programs and innovation, which will drive growth.

Zacks Rank #1 Manitowoc has an expected revenue and earnings growth rate of 3.1% and 5.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.8% over the last 30 days.

Terex Corp. (TEX - Free Report) has been gaining from strong demand and improved volumes. TEX has a solid backlog level, which was $3.7 billion at the end of second quarter 2023. This positions Terex well for improved results in the coming quarters. TEX is progressing well on its “Execute, Innovate, Grow" strategy. In sync with this, TEX has been investing in innovative products, digital innovation, the expansion of manufacturing facilities and acquisitions.

Zacks Rank #1 Terex has an expected revenue and earnings growth rate of 16.3% and 49.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.8% over the last seven days.

H&E Equipment Services Inc. (HEES - Free Report) is one of the largest integrated equipment services companies in the United States. HEES is focused on heavy construction & industrial equipment and rents, sells and provides parts and service support to four core categories of specialized equipment namely, hi-lift or aerial platform equipment, cranes, earthmoving equipment and industrial lift trucks.

Zacks Rank #2 H&E Equipment Services has an expected revenue and earnings growth rate of 15% and 12.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.2% over the last 30 days.

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