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Just Add Water: Farm Equipment Sector Growing

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More than crops are growing these days as the proficiency and proliferation of modern farming makes its way across the globe. To meet the demands of an ever-increasing population, private investment and public subsidies from governments, East to West, are giving a boost to the machines behind agricultural management.

In the last week, the Farm Equipment sector has gained 52 positions on the Zacks Industry Rank list. The 8 companies in this industry now rank #32 out of 260 industries. These businesses have recently seen 33 positive earnings estimate revisions compared to 7 negative revisions, averaging a positive Earnings per Share (EPS) surprise of +16%.

In addition to farming, some of these companies also supply industrial machinery for infrastructure maintenance (street sweepers, embankment mowers, snow plows). These are getting a boost from renewed government spending on public works projects.

Both of the following manufacturers have been upgraded this week to a Zacks Rank #1 (Strong Buy). An upgrade in rank from a Buy or Hold to a Strong Buy demonstrates that a given stock may be gaining value in response to future positive earnings estimate revisions. An understanding of wider industrial trends combined with in-depth company research can provide investors with enhanced perception of future value. Both of these companies have also seen sharp increases in consensus estimates recently, another positive indicator that a stock may be on track for growth.

And when it comes to managing growth, these companies have all the right tools.

Kubota Corp - ADR (KUBTY - Free Report)

KUBTY was upgraded to a Zacks Rank #1 (Strong Buy) last week from #2 (Buy). Its next expected earnings report is on November 1, 2013.

Kubota is the world's largest maker of small tractors and Japan's 2nd largest manufacturer of farm equipment. The company makes engines, construction machinery, industrial castings and machinery, waste recycling plants, prefab housing and pumps. Due to massive growth in overseas revenues (42%), partly from restored economic progress in China, their farming and industrial business is seeing substantial increases.

Alamo Group Inc. (ALG - Free Report)

ALG is a Zacks Rank #1 (Strong Buy). It moved up from a Zacks Rank #3 (Hold) just last week. This company reports quarterly earnings on November 5, 2013.

Alamo Group Inc. is a leading manufacturer of high quality equipment for right-of-way maintenance and agriculture. Their products include tractor-mounted mowing and other vegetation maintenance equipment, street sweepers, agricultural implements and related after-market parts and services.  Strategic acquisitions of complementary companies have helped Alamo build organic growth by increasing cross-selling opportunities and market coverage while consolidating manufacturing.

ALG’s most recent earnings surprise was +27%.

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