Every great story grabs the reader right from the start, but as long as indiscriminate selling rules the day on Wall Street, only half of Dickens' legendary opening is relevant here. Right now, for investors, these are simply the worst of times.
As an homage to the Dickens classic, let us consider a tale of two companies. The first, Terex
Breaking a long-running trend, Terex posted a decidedly disappointing third quarter. Net earnings slipped by 34% to $93.8 million, even as net sales increased almost 15% to more than $2.5 billion. The total backlog of pending equipment sales, a crucial forward indicator, fell 14% just since the second quarter. Backlogs for Terex's aerial work platforms and construction equipment fell by more than 60% and 40%, respectively. In contrast, Terex reported an 8% increase in backlogged crane orders, and only a 9% drop in pending sales of mining equipment.
Bucyrus, meanwhile, enjoyed another knockout quarter with a 124% increase in net earnings, a 380-basis point expansion of EBITDA margin to 17.9%, and a whopping 74% increase in total sales backlog to $2.5 billion. The company's entry into the underground mining equipment business with last year's acquisition of DBT lends limited value to year-over-year comparisons, but nonetheless this was a rock-solid quarter for Bucyrus.
Diversification, it seems, is not always a Fool's best friend. Whether temporarily reconsidering the conventional wisdom of formulaic diversification within a portfolio, or identifying the top choice within a given sector, I believe this is a time for precisely targeted investing. Recent results from Peabody Energy
Because I believe the mining industry will exhibit surprising strength once fundamentals again hold sway over investors, targeted plays like Joy Global
Further Foolishness:
- Even targeted equipment plays are getting hammered.
- Terex warned us of troubles brewing.
- Terex recently expanded its product line.