Motley Fool Guide: The Best Way Buy Heavy Equipment and Machinery Stocks

According to the respected finance website, Motley Fool, there are plenty of opportunities to invest wisely in the construction industry and enjoy a solid return. The editors admit that pouring money into the sector can be challenging, but monetary gains are possible with proper preparation and execution. From Motley Fool editor Lee Samaha on August 1, 2014: “The construction machinery sector can be difficult to invest in, mainly because its fortunes can fluctuate wildly with the economy. But it can also be highly rewarding if you get the timing right.”

komatsucapitlalizationDid you know that the top 50 construction machinery firms had total revenues of more than $163 billion in 2013? Some of the largest companies in the world are in the construction sector. For example, Caterpillar has a market capitalization of about $63 billion while Deere is at about $31 billion. Komatsu market capitalization is at an astounding $2.2 trillion, however the Japanese company is involved in many sectors in addition to construction. To put these numbers in perspective, Nike is capitalized at about $67 billion and Chevrolet is about $54 billion. Coco-Cola is capitalized at $173 billion.

Samaha writes in the article that the construction industry is very cyclical which can be a danger for investors. However, timed correctly, investments in the sector can reap significant rewards. The industry appears dependent on a flourishing economy, but in recent recessions, governmental agencies in several countries have invested in major public infrastructure projects that were beneficial to construction and heavy equipment companies.

Governments may not be in the position to step up in the future due to the high-debt that is bogging down many major countries. Samaha concludes that the construction sector may be becoming even more reliant on the public sector for growth and sustained earnings. Public companies tend to pull back investments when the economy slows — which is not a good thing for investors.

Samaha also writes that China is becoming increasingly important for global heavy equipment and construction companies. According to projections from Statista.com, orders from China will account for about 30 percent of global machinery demand in 2015. That number is compared to 27 percent in North America.

“All told,” writes Samaha. “It’s a great industry to be invested in when the economy is starting to make an upturn. On the other hand, it appears to be becoming more cyclical, so potential investors should be aware of the extra risk involved if the global economy turns down sharply. In addition, keep a close eye on construction activity in China.” For the complete article from Motley Fool click HERE.

We here at North America Heavy Equipment Training Services (NAHETS) believe that the best investment you can make in the heavy equipment industry is in your employees. We specialize in heavy equipment training and when you invest in proper training you will see your company’s profits grow substantially. Thanks for reading.

 

Image courtesy of KomatsuAmerica.com

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