The global economic downturn and the effects of trade wars and rising tariffs have resulted in a generally volatile market. This makes it challenging for investors to identify stable, long-term growth opportunities. Fortunately, some companies can help us navigate this challenging investing environment. Investors seeking to invest in stocks that provide exposure to equipment manufacturers need to look no further than the machinery sector. Companies operating in this space are well positioned for long-term growth as economies worldwide continue expanding, and new technologies are developed. Several subcategories are worth exploring within the machinery manufacturing sector as potential investments. These include companies that manufacture agricultural machinery, construction equipment, mining vehicles and machines, oilfield equipment, process control systems, robotics, and software used by industrial equipment manufacturers.
The PACCAR Corporation is one of the largest global manufacturers of commercial vehicles, particularly trucks and vans. The company is also a leading provider of truck parts and services for new and used commercial vehicles. PACCAR generates roughly two-thirds of its revenue from outside North America, making it an attractive investment given the economic slowdown in the U.S. and uncertainty around trade tariffs. PACCAR offers investors a chance to participate in the rising demand for commercial vehicles worldwide.
The global economic downturn led to a decrease in demand for new trucks and vans. PACCAR has responded by implementing strategies designed to diversify its business. The company has increased its focus on maintenance, repair, and operations (MRO) products and services. PACCAR has also invested in autonomous driving technologies. The commercial vehicle market is expected to experience a rebound as the economy improves and demand for goods and services increases. PACCAR is well positioned to capitalize on this growth with its diversified product offerings, which include a full line of commercial vehicles, services, and MRO products.
PACCAR has a solid financial position with more than $3.6 billion in cash, $1.9 billion in total debt, and a low net debt-to-equity ratio of 0.8. The company’s continued focus on execution and ability to adapt to a rapidly changing market position generates long-term, sustainable growth. PACCAR is expected to generate annualized earnings-per-share growth of 8% over the next five years. This makes the company worthy of consideration for inclusion in long-term, dividend-growth portfolios.
Proto Labs (PRLB)
Proto Labs Inc. designs, engineers, and manufactures prototype and production parts for customers in various industries, including aerospace and defense, automotive, equipment manufacturing, healthcare, oil and gas, robotics, sporting goods, and wearable technology. Proto Labs serves customers from its network of 46 full-service labs located across North America, Europe, and Asia.
The company’s business model allows it to operate as a service provider, enabling it to benefit from the growing needs of companies to test new products and technologies. The continued growth of the internet of things (IoT) has driven demand for IoT devices and sensors, which have been incorporated into a broad range of products. Proto Labs has capitalized on the growing demand for IoT devices by expanding the types of parts its customers can prototype, including plastic and metal.
Proto Labs has a strong track record of growth, having generated compound annual earnings-per-share growth of 14% over the last five years. The company has a healthy balance sheet with more than $250 million in cash and only $54 million in debt. The projected long-term earnings-per-share growth rate for Proto Labs is 22%. This makes the company a substantial investment for long-term, dividend-growth investors.
RBC Bearings (ROLL)
RBC Bearings Inc. engages in the design, manufacture, and distribution of bearings and related products globally. The company offers an extensive range of bearings and associated components used in many industries, including power generation, oil and gas, mining, wind energy, aerospace and defense, marine, agriculture, construction, and general industrial.
RBC has generated substantial revenue and earnings growth over the last several years due to the growing demand for industrial products. As industries become more automated, they require higher volumes of bearings to ensure reliability and efficiency. The company has also benefited from the current low-interest rate environment, as capital-intensive projects that require significant amounts of credit are being pursued.RBC has a solid financial position with $259 million in cash and $234 million in total debt. The company has a long track record of growing its earnings, having generated compound annual earnings-per-share growth of 13% over the last five years. RBC has grown its dividend at an annual rate of 14% over the same period.
The company is expected to generate annualized earnings-per-share growth of 13% over the next five years. This makes RBC a vital consideration for long-term, dividend-growth investors.
Deere & Company
Deere & Company is one of the largest agricultural equipment manufacturers globally. The company also designs and manufactures construction equipment, lawn and garden equipment, mining vehicles, and industrial and marine engines. In addition to its core product offerings, Deere also provides financing, leasing, and rental services.
Deere generates roughly three-quarters of its revenue from North America, with the remaining revenue generated outside the U.S. The company has benefited from the current economic cycle and has seen demand for its products increase in residential and commercial construction markets. Deere’s strong financial position has allowed it to capitalize on opportunities in the agricultural and construction markets, having recently completed a $9 billion acquisition of Precision Planting Corporation.
The company’s strong financial position allows it to pursue new opportunities, including capitalizing on the growing demand for electric vehicles and autonomous transportation. Deere has a long track record of growing its earnings, having generated compound annual earnings-per-share growth of 10% over the last five years. The company has a healthy balance sheet with $5.5 billion in cash, $6.2 billion in total debt, and a net debt-to-equity ratio of 0.8. Deere is projected to deliver annualized earnings-per-share growth of 9% over the next five years. This makes the company a substantial investment for long-term, dividend-growth investors.