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3 Stocks to Watch in the Promising Construction & Mining Equipment Industry
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The Zacks Manufacturing - Construction and Mining industry is well positioned to gain from the stepped-up infrastructure investment spending in the United States and solid demand from the mining sector, fueled by the energy transition trend.
Players like Caterpillar Inc. (CAT - Free Report) , Komatsu (KMTUY - Free Report) and Terex Corporation (TEX - Free Report) are likely to ride on the demand trends. These stocks are likely to benefit from efforts to bring technologically advanced products to the market. These players have also been focused on improving productivity and efficiency to counter cost pressures.
Industry Description
The Zacks Manufacturing - Construction and Mining industry comprises companies that manufacture and sell construction, mining and utility equipment. They support customers using machinery in the construction of commercial, institutional and residential buildings and infrastructure projects. Their equipment is also utilized in underground mining, drilling and mineral processing and surface mining to extract and haul copper, iron ore, coal, oil sands, aggregates, gold and other minerals and ores. Their products are varied, including loaders, pavers, dozers, excavators, concrete mixer trucks, crushing, pulverizing and screening equipment, tractors and cranes. Industry participants support oil and gas, power generation, marine, rail and industrial applications through their reciprocating engines, generator sets, gas turbines and turbine-related services.
Trends Shaping the Future of the Manufacturing - Construction and Mining Industry
Manufacturing Activity Remains in Expansion: The ISM Manufacturing PMI was 54.6% in August, dipping one percentage point from July’s 55.6%. Despite this, August marked the eighth consecutive month of manufacturing growth, following a 10-month period of contraction. Despite the moderation, the sector remained in expansion for the eighth straight month following 10 consecutive months of contraction. Three of four key demand indicators, New Orders, Backlog of Orders, and New Export Orders, also remained in expansion in August. The New Orders Index declined to 53.7% from 56.7% but remained in expansion for the eighth consecutive month. The Production Index held at a strong 58.3%, extending its expansion streak to 10 months. The Backlog of Orders Index was 51.8%, while new export orders edged up to 53.2%, expanding for the second consecutive month. Meanwhile, the Customers’ Inventories Index stayed in “too low” territory or below 50%, which is generally viewed as supportive of future production.
Pricing Actions to Combat High Costs: The industry continues to face elevated inflation across labor, freight, fuel and tariff-related inputs as well as tariff-related impacts. Companies are witnessing labor shortages for some positions and incurring higher costs to meet demand. In addition, disruptions linked to the Iran conflict have further strained supply chains and increased overall cost pressures. The ISM Supplier Deliveries Index indicated slower delivery times for the ninth consecutive month in August, highlighting ongoing logistics bottlenecks. At the same time, the ISM Prices Index remained elevated at 71.1%, marking 23 straight months of rising input costs. This sustained inflation is being driven by higher steel and aluminum prices, tariffs on a range of imported goods and increased petroleum-related costs stemming from Middle East tensions. In response, industry participants are focusing on pricing actions, cost optimization, productivity gains and diversification of supplier networks to offset these pressures.
Energy Transition Trend, Construction Spending to Aid the Industry: The intensifying global focus on shifting from fossil fuels to zero emissions will require a large number of commodities, which, in turn, will support mining equipment demand 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.
Investment in Digital Initiatives a Key Catalyst: 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. Thus, players in the industry are stepping up their research and technological capabilities to bring products equipped with the latest technology into the market.
Zacks Industry Rank Indicates Bright Prospects
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bright prospects in the near term. The Zacks Manufacturing - Construction and Mining industry, a five-stock group within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #72, which places it at the top 29% of 247 Zacks industries.
Before we present a few stocks that you may want to consider for your portfolio, let’s look at the industry’s recent stock-market performance and the valuation picture.
Industry Versus Broader Market
The Manufacturing - Construction and Mining industry has outperformed the Zacks S&P 500 composite and its sector over the past year.
Over this period, the industry has grown 59.7% compared with the sector’s rise of 13.9%. The Zacks S&P 500 composite has moved up 15.8%.
One-Year Price Performance
Industry's Current Valuation
The trailing 12-month EV/EBITDA ratio, a commonly used multiple for valuing Manufacturing, Construction and Mining companies, shows that the industry is currently trading at 17.60X compared with the S&P 500’s 17.61X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 18.94X. The charts below show this.
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Over the last five years, the industry traded as high as 25.10X and as low as 7.54X, with a median of 11.28X.
3 Manufacturing - Construction & Mining Stocks to Watch
Caterpillar: The company ended the second quarter of 2026 with a record backlog of $72 billion, 92% higher than last year. It is positioned to benefit from several secular growth trends, including U.S. infrastructure spending, mining demand related to the energy transition, automation adoption, data center expansion and sustainability investments. To capitalize on rising power-generation and oil-and-gas demand, CAT will restart production of its 10-megawatt gas engine platform. It plans to bring about 1.5 gigawatts of capacity back online. It is also expanding turbine capacity and has repurposed a 250,000-square-foot facility in Wamego, KS. CAT is simultaneously investing in services, e-commerce, sustainability, electrification and other digital initiatives. Caterpillar shares have gained 13% in the past six months.
Caterpillar has a trailing four-quarter earnings surprise of 18.1%, on average. CAT has an estimated long-term earnings growth rate of 21.1%. The Zacks Consensus Estimate for the company for fiscal 2026 earnings has moved up 10% in the past 60 days. The estimate suggests year-over-year growth of 43.6%. The company currently sports a Zacks Rank #1 (Strong Buy).
Komatsu: The company is progressing on its three-year medium-term management plan, Strategic Growth Plan, from fiscal 2025 to fiscal 2027. It is focusing on three pillars: creating customer value through innovation, driving growth and profitability, and transforming its business foundation. Komatsu has been collaborating with a company possessing advanced AI and simulation technologies to develop Software Defined Vehicles (SDVs) and automated vehicle platforms for next-generation mining equipment. For civil engineering and quarry job sites, it has launched a collaboration with partners, including group companies, to automate dump truck operations. More customer job sites are adopting Smart Construction, launched by Komatsu in 2015, amid acute labor shortages and growing awareness of safety. Komatsu continues to invest in growth markets and expand businesses. It remains focused on growing the aftermarket business, which generates relatively stable earnings compared with the more economically sensitive new equipment market. Under its third pillar, transforming the business foundation, Komatsu is making steady progress on key initiatives, including its Enterprise Resource Planning system upgrade project. The company's shares have appreciated 11% in the past six months.
The Zacks Consensus Estimate for Komatsu’s fiscal 2027 earnings has moved up 4% over the past 60 days. KMTUY has a trailing four-quarter earnings surprise of 9%, on average. It currently carries a Zacks Rank #3 (Hold).
Price & Consensus: KMTUY
Terex: The company’s merger with REV Group has created a more diversified specialty equipment manufacturer with emergency, waste, utilities, environmental, material processing and access equipment. Terex continues to advance its “Execute, Innovate, Grow” strategy through operating discipline, capacity expansion and cross-business manufacturing practices. The Terex Operating System remains the framework for process accountability, continuous improvement and automation. In Specialty Vehicles, the company is expanding ladder-truck capacity in Ocala, FL, and S-180 pumper capacity in Brandon, SD, with first Brandon deliveries expected in the fourth quarter of 2026. Management also plans to apply Environmental Solutions manufacturing know-how across Utilities and Specialty Vehicles to reduce labor hours per unit. Terex continues to use product development and technology to support growth across its portfolio. The company has invested in connected assets, digital capabilities, Apptronik robotics and Acculon battery technology. Terex shares have gained 0.1% in the past six months.
The Zacks Consensus Estimate for Terex’s 2026 earnings has moved north by 3% over the past 60 days. The estimate suggests year-over-year growth of 1.4%. TEX has a trailing four-quarter earnings surprise of 14.6%, on average, and an estimated long-term earnings growth rate of 13.2%. The company currently carries a Zacks Rank of 3.
View the Zacks #1 Rank List
Image: Bigstock
3 Stocks to Watch in the Promising Construction & Mining Equipment Industry
The Zacks Manufacturing - Construction and Mining industry is well positioned to gain from the stepped-up infrastructure investment spending in the United States and solid demand from the mining sector, fueled by the energy transition trend.
Players like Caterpillar Inc. (CAT - Free Report) , Komatsu (KMTUY - Free Report) and Terex Corporation (TEX - Free Report) are likely to ride on the demand trends. These stocks are likely to benefit from efforts to bring technologically advanced products to the market. These players have also been focused on improving productivity and efficiency to counter cost pressures.
Industry Description
The Zacks Manufacturing - Construction and Mining industry comprises companies that manufacture and sell construction, mining and utility equipment. They support customers using machinery in the construction of commercial, institutional and residential buildings and infrastructure projects. Their equipment is also utilized in underground mining, drilling and mineral processing and surface mining to extract and haul copper, iron ore, coal, oil sands, aggregates, gold and other minerals and ores. Their products are varied, including loaders, pavers, dozers, excavators, concrete mixer trucks, crushing, pulverizing and screening equipment, tractors and cranes. Industry participants support oil and gas, power generation, marine, rail and industrial applications through their reciprocating engines, generator sets, gas turbines and turbine-related services.
Trends Shaping the Future of the Manufacturing - Construction and Mining Industry
Manufacturing Activity Remains in Expansion: The ISM Manufacturing PMI was 54.6% in August, dipping one percentage point from July’s 55.6%. Despite this, August marked the eighth consecutive month of manufacturing growth, following a 10-month period of contraction. Despite the moderation, the sector remained in expansion for the eighth straight month following 10 consecutive months of contraction. Three of four key demand indicators, New Orders, Backlog of Orders, and New Export Orders, also remained in expansion in August. The New Orders Index declined to 53.7% from 56.7% but remained in expansion for the eighth consecutive month. The Production Index held at a strong 58.3%, extending its expansion streak to 10 months. The Backlog of Orders Index was 51.8%, while new export orders edged up to 53.2%, expanding for the second consecutive month. Meanwhile, the Customers’ Inventories Index stayed in “too low” territory or below 50%, which is generally viewed as supportive of future production.
Pricing Actions to Combat High Costs: The industry continues to face elevated inflation across labor, freight, fuel and tariff-related inputs as well as tariff-related impacts. Companies are witnessing labor shortages for some positions and incurring higher costs to meet demand. In addition, disruptions linked to the Iran conflict have further strained supply chains and increased overall cost pressures. The ISM Supplier Deliveries Index indicated slower delivery times for the ninth consecutive month in August, highlighting ongoing logistics bottlenecks. At the same time, the ISM Prices Index remained elevated at 71.1%, marking 23 straight months of rising input costs. This sustained inflation is being driven by higher steel and aluminum prices, tariffs on a range of imported goods and increased petroleum-related costs stemming from Middle East tensions. In response, industry participants are focusing on pricing actions, cost optimization, productivity gains and diversification of supplier networks to offset these pressures.
Energy Transition Trend, Construction Spending to Aid the Industry: The intensifying global focus on shifting from fossil fuels to zero emissions will require a large number of commodities, which, in turn, will support mining equipment demand 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.
Investment in Digital Initiatives a Key Catalyst: 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. Thus, players in the industry are stepping up their research and technological capabilities to bring products equipped with the latest technology into the market.
Zacks Industry Rank Indicates Bright Prospects
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bright prospects in the near term. The Zacks Manufacturing - Construction and Mining industry, a five-stock group within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #72, which places it at the top 29% of 247 Zacks industries.
Before we present a few stocks that you may want to consider for your portfolio, let’s look at the industry’s recent stock-market performance and the valuation picture.
Industry Versus Broader Market
The Manufacturing - Construction and Mining industry has outperformed the Zacks S&P 500 composite and its sector over the past year.
Over this period, the industry has grown 59.7% compared with the sector’s rise of 13.9%. The Zacks S&P 500 composite has moved up 15.8%.
One-Year Price Performance
Industry's Current Valuation
The trailing 12-month EV/EBITDA ratio, a commonly used multiple for valuing Manufacturing, Construction and Mining companies, shows that the industry is currently trading at 17.60X compared with the S&P 500’s 17.61X and the Industrial Products sector’s trailing 12-month EV/EBITDA of 18.94X. The charts below show this.
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Enterprise Value/EBITDA (EV/EBITDA) TTM Ratio
Over the last five years, the industry traded as high as 25.10X and as low as 7.54X, with a median of 11.28X.
3 Manufacturing - Construction & Mining Stocks to Watch
Caterpillar: The company ended the second quarter of 2026 with a record backlog of $72 billion, 92% higher than last year. It is positioned to benefit from several secular growth trends, including U.S. infrastructure spending, mining demand related to the energy transition, automation adoption, data center expansion and sustainability investments. To capitalize on rising power-generation and oil-and-gas demand, CAT will restart production of its 10-megawatt gas engine platform. It plans to bring about 1.5 gigawatts of capacity back online. It is also expanding turbine capacity and has repurposed a 250,000-square-foot facility in Wamego, KS. CAT is simultaneously investing in services, e-commerce, sustainability, electrification and other digital initiatives. Caterpillar shares have gained 13% in the past six months.
Caterpillar has a trailing four-quarter earnings surprise of 18.1%, on average. CAT has an estimated long-term earnings growth rate of 21.1%. The Zacks Consensus Estimate for the company for fiscal 2026 earnings has moved up 10% in the past 60 days. The estimate suggests year-over-year growth of 43.6%. The company currently sports a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Price & Consensus: CAT
Komatsu: The company is progressing on its three-year medium-term management plan, Strategic Growth Plan, from fiscal 2025 to fiscal 2027. It is focusing on three pillars: creating customer value through innovation, driving growth and profitability, and transforming its business foundation. Komatsu has been collaborating with a company possessing advanced AI and simulation technologies to develop Software Defined Vehicles (SDVs) and automated vehicle platforms for next-generation mining equipment. For civil engineering and quarry job sites, it has launched a collaboration with partners, including group companies, to automate dump truck operations. More customer job sites are adopting Smart Construction, launched by Komatsu in 2015, amid acute labor shortages and growing awareness of safety. Komatsu continues to invest in growth markets and expand businesses. It remains focused on growing the aftermarket business, which generates relatively stable earnings compared with the more economically sensitive new equipment market. Under its third pillar, transforming the business foundation, Komatsu is making steady progress on key initiatives, including its Enterprise Resource Planning system upgrade project. The company's shares have appreciated 11% in the past six months.
The Zacks Consensus Estimate for Komatsu’s fiscal 2027 earnings has moved up 4% over the past 60 days. KMTUY has a trailing four-quarter earnings surprise of 9%, on average. It currently carries a Zacks Rank #3 (Hold).
Price & Consensus: KMTUY
Terex: The company’s merger with REV Group has created a more diversified specialty equipment manufacturer with emergency, waste, utilities, environmental, material processing and access equipment. Terex continues to advance its “Execute, Innovate, Grow” strategy through operating discipline, capacity expansion and cross-business manufacturing practices. The Terex Operating System remains the framework for process accountability, continuous improvement and automation. In Specialty Vehicles, the company is expanding ladder-truck capacity in Ocala, FL, and S-180 pumper capacity in Brandon, SD, with first Brandon deliveries expected in the fourth quarter of 2026. Management also plans to apply Environmental Solutions manufacturing know-how across Utilities and Specialty Vehicles to reduce labor hours per unit. Terex continues to use product development and technology to support growth across its portfolio. The company has invested in connected assets, digital capabilities, Apptronik robotics and Acculon battery technology. Terex shares have gained 0.1% in the past six months.
The Zacks Consensus Estimate for Terex’s 2026 earnings has moved north by 3% over the past 60 days. The estimate suggests year-over-year growth of 1.4%. TEX has a trailing four-quarter earnings surprise of 14.6%, on average, and an estimated long-term earnings growth rate of 13.2%. The company currently carries a Zacks Rank of 3.
Price & Consensus: TEX