These Stocks Beat Shipping Stocks

With dayrates for shipping goods abroad soaring, shipping firms -- and their investors -- have enjoyed smooth sailing over the past few years. But I've found investments from another sector that are beating the pants off shipping stocks -- and I know where you can find out more about them.

Would the real hot stocks please come forward?
The 5,500 stocks that more than 115,000 Motley Fool CAPS community members have rated include descriptive "tags" that group them with other companies sharing similar qualities -- a country of origin, sector, or end product, for example. Clicking the Shipping tag pulls up a list of 59 stocks that have had a marginal loss of 0.7% in the past year. That might not sound great, but the S&P 500 lost 7.8% during the same time frame.

But CAPS tags can lead you to stocks whose returns have outpaced even the Shipping group: Farm & Construction Machinery. This group is comprised of 23 companies that have outperformed the returns of the broader market and Shipping group with a 14.5% average gain in the past year.

Each group has its share of winners and losers, of course, but CAPS can be a great resource for zeroing in on potential opportunities in each area.

From macro to micro
You can sort tag groups by their CAPS ratings, from one to a maximum five stars, and then see which players -- from Wall Street to Main Street -- are bullish or bearish on a company, and why.

For instance, here are a few of the stocks in the Shipping group:

Sources: Motley Fool CAPS and Yahoo! Finance as of Aug. 15.

Now, based on the interest in the CAPS community, here's a sampling of Farm & Construction Machinery stocks that investors may want to consider.

Source: Motley Fool CAPS, as of Aug. 15.

Mine, all mine!
Mining equipment maker Bucyrus designs and builds the massive machines that help dig metals and other items out of the earth. The company turned in an impressive first quarter, reaping the downstream rewards of increased demand and profit spilling over from the mining industry. With heavy wear and tear on mining equipment -- and new exploration coming on at a rapid pace -- Bucyrus is expanding to meet equipment orders, including an additional 24 mammoth shoveling machines per year.

After acquiring underground specialist DBT in 2007, Bucyrus now provides equipment for surface and underground mining. Along with core growth, this helped the company post a solid second quarter, with earnings of $62.2 million on $621 million in sales. Though operating margin in the underground-mining segment lags that of the surface-mining business, sales and operating income nearly doubled compared to last year.

Bucyrus' backlog grew by 50.8% to $2.17 billion since the start of the year, giving investors a glimpse of good things to come. The stock has been on fire all year, and a good majority of CAPS investors see the growth continuing, with more than 96% of members who've rated Bucyrus expecting it to outperform the market.

More Deere, less buck
Global trends and industrialization abroad are also helping equipment companies like Deere and Caterpillar boost sales around the globe. But other factors have also increased Deere's international sales, including increasing ethanol production and a weak U.S. dollar. The exaggerated disparity in exchange rates has been a boon for exporting industries, including agricultural products and basic material makers like DuPont (NYSE:DD), as foreign buyers get more stuff for their buck.

The second quarter's positive macro trends helped Deere increase global agricultural equipment sales by 35%, while hiking operating profits in this division by 47%. With the agricultural sector accounting for about 60% of Deere's total sales, and the seemingly never-ending rise in agricultural prices, many investors believe Deere can overcome rising costs by raising prices itself. CAPS members remain bullish on Deere; nearly 96% of the 2,091 CAPS members who've rated Deere gave it a thumbs-up.

Before you buy ...
Of course, what's happened in the past is no indicator of where investors should be putting their capital now. But the underlying reasons behind dramatic run-ups in stocks or groups of stocks can clarify trends that may significantly affect investments. Just make sure to do your own due diligence, rather than simply following crowds or individual recommendations.