Business was flying high for aerial work platform maker JLG Industries (NYSE:JLG) in the January quarter. Aided by replacement spending from contractors and equipment rental companies, the company managed to post 49% revenue growth and more than tripled net income from the year-ago quarter.

Considering that the Wall Street consens-a-guess was for a net loss for the second quarter, investors took the stock skyward in early trading on Friday.

Not surprisingly for a maker of heavy-duty construction equipment, JLG Industries has been hit hard by the high price of steel. Although management did report that steel price hikes are abating, the company hasn't been completely able to recoup the raw-material costs through surcharges.

In fact, JLG Industries estimated that perhaps as much as $0.30 a share in earnings was stripped away by the higher year-over-year steel prices. Given the company's reported earnings of $0.17 per share, that's a breathtaking impact.

Before getting excited about the potential of a boom cycle in capital construction equipment and lower steel prices, investors should pause for a moment. On its conference call, management strongly suggested that much of the business it has been seeing is more of a replacement cycle business than new orders. As such, nobody is as of yet sounding the "all clear" for the heavy machinery market.

Whatever the nature of the orders, business is looking good for JLG Industries. Its order book climbed 44% from the first quarter to $290 million, and the company recently pushed through price increases (in addition to higher steel surcharges). Although the company did report negative free cash flow for the second quarter, it is doing an overall better job of managing its working capital needs.

It's too soon to say that the market for construction equipment is about to soar, but there certainly appears to be solid demand for JLG Industries' aerial equipment. Management is guiding its estimates upward, and the company has been in the favorable position of actually turning down some business of late. What's more, as long as the economy stays on track, there will eventually be demand for not just replacement equipment, but new machinery as well.

While the stock doesn't appear cheap at first blush, these sorts of stocks never do until the recovery is well under way. Of course, that's the trick -- any investor looking at JLG Industries shares needs to be confident that a recovery in construction capital spending is about to happen, or what went up quickly could come down just as fast.

Fool contributor Stephen Simpson, a chartered financial analyst, has no ownership interest in any stocks mentioned.