Truist Securities Highlights Two Machinery Names To Own

Investing.com -- Truist Securities has identified leading machinery stocks as the sector navigates questions about demand sustainability and earnings momentum. The firm maintains Buy ratings on both Caterpillar and Deere, citing multiple growth drivers across power generation, construction, and agricultural equipment markets.

1. Caterpillar

Caterpillar tops the list as one of the most debated names in machinery, with investors questioning whether earnings and backlog upside can continue. Power demand continues to exceed expectations, with the company evaluating facility repurposing to expand backup-power capacity. This suggests ongoing strength in orders and backlog. Truist Securities notes that underappreciated upside could come from oil and gas, which may emerge as an incremental margin driver within the Power & Energy segment. Construction demand remains strong and could provide another source of upside. Mining original equipment also presents opportunity against a depressed base following significant restructuring.

2. Deere

Deere ranks second among machinery stocks, with Truist Securities noting it is time to own farm equipment names. The firm acknowledges that some recent stock performance reflected positioning as investors sought shelter when power stocks fell out of favor. The debate in farm equipment has shifted from whether the group can move past the trough to the magnitude of the recovery. In late August, Deere reported its North American planter and sprayer early order program was up mid-single digit. Demand could strengthen further given that corn prices have moved above $5.00 per bushel from roughly $4.00 when the program opened. While Deere remains the most debated name on valuation, Truist Securities believes current earnings are still below trough levels and operating leverage remains underappreciated.

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