Building Wealth Through Mining Equipment Manufacturers: 5 Stock Picks Leading the Infrastructure Boom

The construction and mining equipment sector is experiencing a powerful tailwind. Infrastructure spending is accelerating, mining demand is surging due to the energy transition, and supply-chain bottlenecks are finally easing. For investors seeking exposure to this growth, five key players stand out: Caterpillar Inc. (CAT), Komatsu (KMTUY), Terex Corporation (TEX), Astec Industries (ASTE), and H&E Equipment Services (HEES).

These companies are not just benefiting from cyclical demand—they’re investing heavily in digital transformation, automation, and zero-emission solutions. Let’s examine why mining equipment manufacturers and their peers are positioned for sustained outperformance.

Why the Sector is Heating Up

The Zacks Manufacturing—Construction and Mining industry comprises firms producing machinery for infrastructure projects, underground and surface mining, and utility work. Their equipment extracts copper, iron ore, coal, oil sands, and precious metals. They supply engines, turbines, and generator sets for energy, rail, and marine applications.

Three forces are driving growth:

First, infrastructure spending is real. The U.S. government is committing significant capital to transportation, water systems, and telecommunications. This translates directly into demand for dozers, loaders, excavators, and concrete equipment.

Second, the energy transition demands minerals. As the world pivots to renewable energy and electrification, copper, lithium, and rare earth mining will accelerate. This creates a multi-year runway for mining equipment manufacturers to capitalize on commodity extraction needs.

Third, supply chains are normalizing. After 10 months of manufacturing contraction, recent data shows improvement. Industrial production grew 0.7% in July and 0.4% in August. The ISM Manufacturing Index hit 47.6% in August (up from 46.4%), signaling a slowing rate of decline. The Supplier Deliveries Index posted 48.6% in August—the best reading in 11 months. As logistics normalize, companies can fulfill backlog and boost margins.

Market Opportunity & Valuation Sweet Spot

The industry has beaten expectations. Over the past year, the sector surged 57.1%, crushing both the Industrial Products sector (18%) and the S&P 500 (14.6%).

Yet valuations remain reasonable. Trading at 9.46x forward EV/EBITDA, the sector is cheaper than the S&P 500 (11.14x) and Industrial Products peers (14.27x). Over five years, the multiple has ranged from 7.04 to 14.83, with a median of 10.20. This means there’s still room to expand valuations if earnings growth materializes.

Speaking of earnings: the Zacks Industry Rank for Manufacturing—Construction and Mining stands at #5, placing it in the top 2% of 250 industries. Analysts have revised this year’s earnings estimates upward 30% year-to-date—a sign of growing confidence.

Four Catalysts Reshaping the Landscape

Margin expansion through pricing and efficiency. Companies face input cost inflation and logistics headwinds, but they’re fighting back with aggressive pricing and cost-reduction initiatives. By streamlining operations and focusing on high-growth markets, firms like these are protecting profitability.

Digital transformation and automation. AI, cloud computing, advanced analytics, and robotics are becoming standard. Autonomous machinery reduces carbon emissions and boosts safety—major selling points. Companies investing heavily in R&D to commercialize these products will gain competitive edges.

Backlog strength. Strong order books provide visibility into future revenue. This reduces execution risk and signals customer confidence.

Rental demand resilience. Rising interest rates and equipment delivery delays are pushing customers toward renting rather than buying. Rental businesses offer recurring revenue streams and higher margins—a secular shift in the industry’s favor.

Five Stocks to Watch

Caterpillar Inc. (CAT) — The industry’s flagship.

Caterpillar’s revenues and earnings have grown year-over-year for 10 consecutive quarters. The backlog reached $30.7 billion at Q2 2023, up $2.2 billion year-over-year. This will drive near-term revenue growth. The company benefits from residential and non-residential construction strength across North America.

CAT is investing in e-commerce, sustainability, and electrification—positioning itself for the next decade. The stock has rallied 63% over the past year.

Consensus estimates call for 19.8% earnings growth in 2023, with estimates revised up 10.5% in the past 60 days. The company boasts an 18.5% average trailing four-quarter earnings surprise and a 12% long-term growth rate. Zacks Rank: #1 (Strong Buy).

Komatsu Ltd. (KMTUY) — The global alternative.

Komatsu is riding strong construction and mining demand globally, supported by higher pricing. In North America, residential construction, non-residential projects, and infrastructure work are all solid. The Tokyo-headquartered manufacturer is ramping zero-emission solutions and expanding underground hard rock mining offerings. Automation and autonomous equipment are key growth vectors.

Shares have surged 61% in 12 months. Fiscal 2023 earnings estimates have been revised up 7.5% over 60 days, pointing to 12% year-over-year growth. The company has a 29.8% average earnings surprise and a 9.7% long-term growth rate. Zacks Rank: #1.

Terex Corporation (TEX) — The momentum play.

Terex’s backlog has climbed for 10 straight quarters, hitting $3.7 billion at Q2 2023. Strong demand, pricing discipline, and cost discipline position it well. The “Execute, Innovate, Grow” strategy is driving acquisitions, manufacturing expansion, and digital innovation in aerial work platforms and material processing equipment.

Shares have gained 85% in one year—the sector’s top performer. The Zacks consensus calls for 60.9% earnings growth in 2023, with estimates up 17% in 60 days. TEX posts a 32.8% earnings surprise average and an 18.2% long-term growth rate. Zacks Rank: #1.

Astec Industries, Inc. (ASTE) — The operational turnaround.

Astec is witnessing robust demand in Infrastructure Solutions and Material Solutions. The OneASTEC business model—built on Simplify, Focus, and Grow pillars—is helping it navigate supply-chain challenges and improve operating performance. Management is rationalizing its footprint, investing in innovation, and executing disciplined acquisitions.

Shares have climbed 41% over 12 months. Earnings estimates have been revised up 18% over 60 days, with consensus calling for 163% year-over-year growth in 2023. The company has a 20% average earnings surprise. Zacks Rank: #1.

H&E Equipment Services, Inc. (HEES) — The rental specialist.

HEES reported record rental revenues and gross margin in Q2 2023. Rental rates climbed 8.2% year-over-year—among the best in the industry. Its rental fleet average age of 42.5 months is well below the 50.3-month industry average, signaling newer, more efficient equipment.

The company is aggressive: $247 million in gross capital investment in Q2, plus 17 new branches opened recently. Rising rates and delivery delays are accelerating the shift from ownership to rental, a structural tailwind for HEES.

Shares have gained 41% in one year. Consensus earnings estimates for 2023 show 11.2% growth, with estimates up 3% in 60 days. HEES has a 24.1% earnings surprise average and an 11.2% long-term growth rate. Zacks Rank: #2 (Buy).

The Bottom Line

Construction and mining equipment manufacturers are benefiting from three converging trends: government infrastructure investment, commodity demand from the energy transition, and operational improvements from digital innovation. With valuations reasonable and earnings estimates rising, the sector offers asymmetric risk-reward.

Caterpillar, Komatsu, Terex, Astec, and H&E Equipment Services each offer distinct exposure—whether you want a market leader, a global diversifier, a momentum story, an operational turnaround, or a rental play. The tailwinds are strong, and the backlog is full.