Mining Equipment & Construction Stocks Positioned for Growth Amid Sector Headwinds

The manufacturing sector has faced sustained pressure, but within the construction and mining equipment space, selective opportunities are emerging. Despite near-term industry challenges—including manufacturing contraction and tariff-induced spending caution—two powerful tailwinds are reshaping demand: substantial U.S. infrastructure investment and accelerating demand for mining tools driven by the global energy transition. Three companies stand out as potential beneficiaries: Caterpillar Inc. (CAT), Terex Corporation (TEX), and Astec Industries (ASTE).

The Paradox: Weakness Meets Opportunity

The Zacks Manufacturing - Construction and Mining industry is navigating turbulent waters. The Institute for Supply Management’s manufacturing index spent 26 consecutive months in contraction territory until December 2024, then briefly recovered in January-February before sliding back into contraction mode in March (49%). By December, readings had deteriorated further to 47.9%, the year’s lowest point. The New Orders Index mirrors this weakness, hovering around 47.7%.

This contraction reflects dampened customer spending, largely attributable to tariff impacts. Yet beneath this headline weakness lies structural demand building from two distinct sources: the energy transition driving mining tools and equipment procurement, and multi-year U.S. infrastructure commitments requiring heavy equipment and construction machinery.

Why This Moment Matters for Mining Equipment Demand

The shift toward renewable energy and zero-emission targets is creating unprecedented demand for critical minerals—lithium, copper, cobalt, and others. This economic force is translating into sustained orders for mining tools, excavators, crushers, and processing equipment. Simultaneously, U.S. government infrastructure spending under the Infrastructure Investment and Jobs Act is supporting demand for construction equipment, loaders, dozers, and concrete processing systems.

Beyond volume, the industry is benefiting from pricing power. Companies are implementing cost-reduction initiatives and efficiency improvements to offset tariff headwinds and input cost inflation. More importantly, digital transformation—including AI, cloud computing, robotics, and autonomous machinery—is becoming a competitive differentiator and margin driver.

Caterpillar: Record Backlog, Digital Momentum

CAT returned to year-over-year revenue growth in Q3 2025 after six quarters of decline, driven by volume expansion across all segments. The company exited the quarter with a record backlog of $39.9 billion—a significant cushion supporting near-term revenue visibility.

CAT’s exposure to mining equipment is particularly attractive. Adoption of its autonomous mining fleet continues accelerating due to productivity, safety, and cost advantages. The global shift toward mining for energy transition minerals is directly benefiting CAT’s portfolio. Additionally, as technology firms scale data centers globally for AI infrastructure, CAT is experiencing robust order flow for reciprocating engines—a high-margin segment. The company plans to double this capacity through multi-year capital investment.

On the technology front, CAT recently introduced Cat AI Assistant, an AI-driven solution enabling customers to interact with equipment and digital applications more intuitively. This positions the company at the intersection of mining tools innovation and software advancement.

Stock Performance & Outlook: CAT shares gained 23.8% over the past three months. The Zacks Consensus Estimate for 2026 earnings has increased 6% in 90 days, projecting 20.5% year-over-year growth. The stock carries a Zacks Rank #2 (Buy).

Terex: Strategic Repositioning Through Merger

Terex is executing a strategic pivot to reduce cyclicality. The company divested its Terex Tower and Rough Terrain Cranes businesses and plans to exit Aerials. More significantly, it entered a definitive merger agreement with REV Group, creating a specialty equipment manufacturer focused on emergency response, waste management, utilities, and environmental solutions—segments characterized by lower cyclicality and more resilient demand.

The combined entity will generate approximately $7.8 billion in combined net sales and unlock estimated run-rate synergies of $75 million by 2028. This transformation better positions the company to weather manufacturing cycles while capturing growth in less cyclical end markets.

Stock Performance & Outlook: TEX gained 16% over three months. The 2026 earnings consensus estimate suggests 11.1% year-over-year growth. TEX carries a Zacks Rank #3 (Hold).

Astec: Accretive Acquisitions Driving Margins

Astec has pursued a disciplined growth strategy through targeted acquisitions. It recently completed acquisition of CWMF, LLC, a manufacturer of portable and stationary asphalt plant equipment, and previously acquired TerraSource Holding in July 2025—a provider of crushers, feeders, separators, and dewatering solutions.

This acquisition strategy is materially improving margins. TerraSource’s aftermarket parts and service business generates 60% of revenues but accounts for 80% of gross profit—a high-margin mix. Since integration began in Q3 2025, the Materials Solutions segment has expanded its parts sales mix by 670 basis points. The segment maintains stable backlog over five quarters as customer sentiment improves alongside favorable interest-rate conditions.

The Infrastructure Solutions segment continues capitalizing on strong demand for asphalt and concrete plants. Management’s focus on cost reduction and pricing actions provides buffers against tariff headwinds.

Stock Performance & Outlook: ASTE gained 7.6% over three months. The 2026 earnings estimate has been revised upward 1% in 90 days, indicating 10.7% year-over-year growth. ASTE carries a Zacks Rank #3.

Industry Valuation Context

The manufacturing - construction and mining equipment industry currently trades at 17.37X trailing 12-month EV/EBITDA, a discount to the S&P 500 (18.87X) and Industrial Products sector (25.7X). Historically, the industry has traded as high as 18.08X and as low as 7.54X, with a 11.26X median over five years. This valuation context suggests limited margin-of-safety premium despite emerging tailwinds.

The Bottom Line

While the manufacturing sector remains structurally challenged in the near term, mining tools demand and infrastructure spending create selective opportunities within construction and mining equipment manufacturers. CAT’s record backlog and technology positioning, TEX’s merger transformation, and ASTE’s accretive acquisition strategy each offer distinct investment angles for those positioned to capture the energy transition and infrastructure spending trends.