Diversification can be a funny thing – while exposure to multiple markets with relatively low correlation can help over the long term, it also means that purer plays will tend to outperform at various points in the cycle. Oshkosh (OSK) hasn’t done badly since my last update relative to the larger industrial group (nor over the last year), but it has been left in the dust by stocks more leveraged to construction and mining equipment like Caterpillar (CAT), Deere (DE), Komatsu (OTCPK:KMTUY), and Terex (TEX).
I think Oshkosh is still in a relatively good place from a cyclical perspective. Although I have some concerns that expectations for non-residential construction are too high, I think Oshkosh is nevertheless going to see improving demand from here and improving margins. Relative to other industrials, I still like the above-average long-term total appreciation potential, but I would remind readers that it’s a cyclical stock and holding over the long-term may not be the easiest choice.
Follow this link to the full article:
Oshkosh Still Early In Its Cyclical Upswing And Offers Upside
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