With the publication of a comprehensive report on the capital goods industry, William Blair & Company initiated research coverage of 11 capital goods companies.
Analyst Lawrence De Maria, who recently joined the firm along with Nick Heymann, Chase Jacobson, and Sam Eisner as part of a new Global Industrial Infrastructure team, assigned Outperform ratings to Caterpillar, Inc. (CAT $107.58), Fiat Industrial S.p.A. (FI.MI €8.52), and Titan International, Inc. (TWI $25.38).
De Maria assigned Market Perform ratings to AGCO Corporation (AGCO $48.73), Astec Industries, Inc. (ASTE $37.65), Atlas Copco AB (SEK 165.80), CNH Global N.V. (CNH $36.33), Deere & Company (DE $81.43), Joy Global Inc. (JOYG $95.41), The Manitowoc Company, Inc. (MTW $16.38), and Terex Corporation (TEX $26.39).
In his report, titled "Different Gear, Still Speeding," De Maria wrote, "We believe that the global capital goods industry offers excellent cyclical growth prospects through at least the middle part of the decade in many cases, although the share performance the past one to two years from the initial cyclical recovery has made stock selectivity paramount to maximizing returns. We believe that ample opportunities remain to invest in the sector, albeit more selectively at this point."
He continued, "Within the sector, we are primarily focused on the agriculture, construction, and mining segments, whose sales account for slightly less than a quarter of the total. We see potential for significant long-term strength in construction and mining markets as a result of infrastructure spending, and a generally favorable outlook for farm equipment, although one that has far more acute regional interplay. Although we believe each subsector has its merits, we prefer construction (early cycle, global demand) over farming (later cycle, weather) at this point in the cycle, and we like mining but are selective based on valuation."
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