In light of Caterpillar Inc. (NYSE:CAT) propelling the Dow Jones Industrial Average over 2% higher on Tuesday, four farm and construction machinery companies with high financial strength and profitability are AGCO Corp. (NYSE:AGCO), Columbus McKinnon Corp. (NASDAQ:CMCO), Gencor Industries Inc. (NASDAQ:GENC) and Oshkosh Corp. (NYSE:OSK) according to the All-in-One Screener, a Premium feature of GuruFocus.
Caterpillar gives Dow a late surge
Shares of the Deerfield, Illinois-based heavy equipment manufacturer closed at $136.88, up 4.83% from Monday's close of $130.57. The stock helped the Dow post a 556.79-point gain, a 2.13% increase from the previous close of 26,085.80.
On the other hand, FAANG stocks like Amazon.com Inc. (NASDAQ:AMZN) and Netflix Inc. (NASDAQ:NFLX) finished in the red: The Nasdaq Composite Index increased just 0.94% following a 2% decline on Monday.
According to CNBC, Art Hogan, chief market strategist at National Securities, said that the third quarter could see a mean-reversion in cyclical sectors, sectors that could have been oversold during the coronavirus pandemic.
Investor sentiment increased on the back of Florida and California, two states that have seen surging coronavirus cases over the past week, report new cases slightly lower than the seven-day average.
As such, investors might find opportunities in farm and machinery companies with strong balance sheets and are thus capable of weathering the virus outbreak. The All-in-One Screener listed four companies with a GuruFocus financial strength rank of at least 6 and a GuruFocus profitability rank of at least 7, two of several criteria for high-quality companies.
AGCO manufactures agricultural equipment through brands like Massey Ferguson, Challenger, Fendt, Valtra and GSI. GuruFocus ranks the Duluth, Georgia-based company's financial strength 6 out of 10: Interest coverage ratios are outperforming over 71.74% of global competitors despite debt ratios underperforming over 58% of global machinery companies.
Gurus with holdings in AGCO include Jeremy Grantham (Trades, Portfolio)'s GMO and Jim Simons (Trades, Portfolio)' Renaissance Technologies.
Columbus McKinnon designs, manufactures and markets motion control products, technologies, automated systems and services that ergonomically move and secure materials. GuruFocus ranks the Getzville, New York-based company's financial strength 6 out of 10: It has a good Piotroski F-score of 6 despite interest coverage ratios underperforming over 55% of global competitors.
Columbus McKinnon's profitability ranks 7 out of 10, driven by expanding operating margins and a return on equity that outperforms 81.29% of global competitors despite a three-year revenue growth rate that underperforms approximately 65% of global machinery companies.
Gencor manufactures heavy machinery used in the production of highway construction materials and environmental control equipment. GuruFocus ranks the Orlando-based company's financial strength 10 out of 10 on several positive investing signs, which include robust interest coverage and Altman Z-scores.
Gencor's profitability ranks 7 out of 10 on the back of net margins outperforming close to 70% of global competitors and a Joel Greenblatt (Trades, Portfolio) return on capital outperforming over 80.56% of global machinery companies despite a three-year revenue growth rate underperforming over 60% of global peers.
Oshkosh manufactures access equipment, specialty vehicles and military trucks. GuruFocus ranks the Wisconsin-based company's financial strength and profitability 7 out of 10 on the back of debt ratios that outperform over 66% of global competitors, operating margins that have increased over the past five years and returns that are outperforming over 90% of global machinery companies.
Disclosure: No positions.
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This article first appeared on GuruFocus.