Deere & Company (DE), Caterpillar Inc. (CAT), CNH Global NV (ADR) (CNH): Read This Before You Invest in Machinery Stocks

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For CNH Global NV (ADR) (NYSE:CNH), one of the most awaited events is the company’s merger with Fiat SpA. Recently, Fiat’s chairman confirmed that this merger will take place in the third quarter of 2013.

Fiat Industrial currently holds 88% of CNH Global NV (ADR) (NYSE:CNH)’s shares, and together these companies will form a new entity, which will be traded on the NYSE. It is expected that this merger will unlock new operational value that was restricted with CNH Global’s limited trading liquidity and capital structure. The company will enhance its awareness as it takes a leap from a small-cap stock to a large-cap stock, providing an investing opportunity for long-term investors.

There is additional opportunity from two assets, namely Iveco and Case construction, which are currently not performing well. It is expected that both of these brands have hit the cyclical trough. With this merger, the new company will undergo a restructuring and will further expand the geographic presence of these brands. This will improve sales once the market recovers. This stock is recommended as a buy for long-term investors.

The bottom line

All of these companies have been moving in the right direction for their long-term growth strategies. However, macro headwinds in the mining industry this year are making me take a cautious view of Caterpillar Inc. (NYSE:CAT). I will recommend a hold on this stock for now.

However, prospects for Deere and (NYSE:DE), CNH Global NV (ADR) (NYSE:CNH) are looking good at this time, and I am bullish on both of them. Deere has been performing well in North America and its expansion plans in South America provide a good future outlook for the company. CNH Global is on the verge of merging with Fiat Industrial, which will unlock new operational synergies for the company.

The article Read This Before You Invest in Machinery Stocks originally appeared on

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