Technology has infiltrated almost every industry, and the agriculture sector is no exception. Nowadays, farmers can monitor their crops digitally and even manage their irrigation systems online. So it should be no surprise that agricultural machinery stocks have also recently resumed. In fact, according to a recent report by Bank of America Merrill Lynch, agricultural machinery stocks are some of the best performers in the S&P 500 index so far this year. The four stocks below are all excellent options for investors looking to capitalize on the growing demand for agricultural equipment.
Donaldson Company (DCI)
Headquartered in Wilton, Connecticut, Donaldson Company is a leading manufacturer of air handling products. The company’s products are used in various industries, including oil and gas, power generation, and agricultural equipment. Donaldson has seen a nice boost in revenue over the past couple of quarters thanks to record sales in the farm segment – particularly in the construction and spreader markets. The company has also benefited from the strong U.S. economy and low-interest rates, which have driven a spike in demand for construction and infrastructure projects. As a result, Donaldson has a Zacks Rank #3 (Hold).
Federal Signal (FSS)
Based in Hawthorne, New York, Federal Signal is a diversified manufacturer and supplier of public safety and industrial equipment. The company has a variety of products, but its agricultural segment is seeing strong growth. Federal Signal’s agricultural segment includes pressure control systems, application-specific products, and sprayer systems. The farm business has benefited from favorable weather conditions and robust crop production. The company also recently reported that it plans to expand its presence in Asia, which should help drive long-term growth. Federal Signal has a Zacks Rank #3 (Hold).
Woodward is an industrial automation solutions provider headquartered in Rockford, Illinois. The company’s solutions are used in various industries, including agriculture, chemicals, energy, mining, metals, and process. Woodward’s agricultural business consists of equipment, software, and services designed to optimize crop production. The farm segment saw more robust than expected results during the past year, driven by improved crop conditions and weather, increasing global crop production, and solid farm cash receipts. As a result, Woodward has a Zacks Rank #3 (Hold).
Altra Industrial Motion (AIMC)
Colorado-based Altra Industrial Motion, or AIM, provides engineered solutions for industrial applications. Although AIM’s business is not entirely focused on agriculture, the agricultural machinery segment represents one of the company’s most profitable divisions. The farm machinery segment is benefiting from higher demand for corn and soybean cultivation, which has led to better utilization of AIM’s products. AIM also recently secured a contract to provide a new machine for harvesting corn, which will help maintain the segment’s momentum. Altra Industrial Motion has a Zacks Rank #3 (Hold).