Jefferies Identifies Five Machinery Stocks Poised for Long-Term Growth After Volatile Earnings Season

NEW YORK — Following a highly volatile third-quarter earnings season, Jefferies has spotlighted five machinery companies it views as top investment opportunities. The firm’s analysts cited strong earnings resilience, margin outperformance, and strategic exposure to expanding markets such as data centers, electrification, and long-cycle industrial demand.

Caterpillar: Riding the Data Center Power Demand Boom

Caterpillar Inc. (NYSE: CAT) delivered one of the strongest earnings beats of the season, posting 5% higher revenue than expected, an 86-basis-point EBIT margin improvement, and 9% above-consensus EPS.
The company’s Power Generation segment surged 31%, fueled by surging demand for backup power solutions for data centers. Shares rallied 12% on the results, signaling strong investor confidence.
Jefferies named Caterpillar its top sector pick, underscoring the company’s consistent profitability and direct exposure to global data center infrastructure expansion.

Carrier Global: Cooling Demand Drives Growth Potential

Carrier Global Corp. (NYSE: CARR) also earned a spot on Jefferies’ preferred list after its third-quarter results topped estimates. The company reported a 1% revenue beat and 79 basis points of margin expansion, led by rapid growth in its data center cooling segment, which is on track to reach $1 billion in annual revenue.
Although shares dipped 5% post-earnings, Jefferies maintained a positive outlook, noting that Carrier remains one of the leading beneficiaries of surging global demand for cooling and energy-efficient infrastructure.

Cummins: Demonstrating Stability Amid Trucking Sector Pressures

Cummins Inc. (NYSE: CMI) impressed with 4% revenue growth above forecasts and 74-basis-point EBIT margin expansion, while lifting its 2025 EPS guidance by 1.8%.
Despite tariff headwinds and a slowdown in heavy-truck production, Cummins maintained operational stability. The company reported a $23 million net tariff impact but said price adjustments and supply chain efficiencies are improving heading into 2026.
Jefferies highlighted Cummins as a defensive holding within the sector, citing its disciplined cost control and ability to sustain profitability through market fluctuations.

Parker-Hannifin: Early Signs of Industrial Recovery

Parker-Hannifin Corp. (NYSE: PH) recorded one of the strongest margin expansions among machinery peers, with 3% higher-than-expected revenue and an impressive 308-basis-point gain in margins.
Its North American industrial segment saw 2% organic growth, marking the first positive quarter after seven straight declines. Jefferies viewed this as an early sign of short-cycle stabilization, reinforcing Parker-Hannifin’s solid position across diversified and long-cycle markets.

WESCO International: Gaining Momentum from Electrification and Data Centers

Rounding out the top five, WESCO International Inc. (NYSE: WCC) reported 5% revenue growth above expectations and maintained a 50% growth forecast for its data center division in 2025, up from 40% previously.
The stock climbed 11% on earnings day, one of the strongest reactions among distribution companies. Jefferies emphasized that WESCO stands to benefit directly from accelerating investment in electrification and digital infrastructure through 2026.

Jefferies’ Outlook: Focus on Structural Growth and Earnings Resilience

According to Jefferies, all five companies are strategically positioned to benefit from structural growth drivers in key sectors such as artificial intelligence, data centers, and clean energy.
The firm concluded that, as earnings volatility continues across industrial markets, investors are likely to favor companies capable of sustaining profit margins and leveraging durable demand trends in high-growth areas.