In the early days of navigating whatever downturn lies ahead, there’s no clear subsector within machinery that stands out for an ability to better manage the downturn than others. Across trucks, construction, ag, mining and general industrial exposure, we expect tough top line declines. That said, even for the relatively more highly levered names, we don’t see liquidity issues. Given the high degree of uncertainty currently as we try to form a view of how low the bottom will be, the stocks have proven that they can move rapidly across a wide range. The late March lows appeared to test a significant recession scenario, but there’s nothing to prevent a return to those levels and it supports an agile approach to machinery.

Top Picks:

  • Allison Transmission (ALSN)
  • United Rentals, Inc. (URI)

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