The 10 Worst Machinery Stocks of 2011

What a crazy year it's been for investors. The S&P 500 jumped over 8% by May, only to turn around and find itself down over 10% in August, mainly as a result of the European debt crisis and Washington's inability to agree on a solution to our debt dilemma. Now, at the end of December, the S&P has fought back and is poised to end the year essentially flat.

But while the markets as a whole didn't change much over the past 52 weeks, there were certainly some companies that had a year to forget in 2011.

Here's a list of 2011's 10 worst performers in the machinery industry.


% Return in 2011



Parker Hannifin (NYS: PH)




Illinois Tool Works (NYS: ITW)


Joy Global (NYS: JOY)


Eaton (NYS: ETN)










Source: S&P Capital IQ. Only includes companies listed on U.S. exchanges that contain a market capitalization greater than $500 million. Returns as of Dec. 28.

These companies make all kinds of things -- so they can be vulnerable to the overall state of the economy and to consumer and infrastructure spending. While that may have helped drive these stocks lower, they were still outperformed by their peers.

Illinois Tool Works is a company that carries strong exposure to cyclical markets through its customers. That's a main reason that you see the stock down over 13% year to date. The company doesn't have the diversification that its competitors enjoy in other areas such as health care and aerospace. But ITW has also shown itself to be aggressive in acquiring smaller companies, many of which have already shown increased performance and should help the company's long-term prospects.

Perhaps surprisingly, Caterpillar (NYS: CAT) nearly made this list, as it has lost 4.6% year to date. The stock has declined despite a year that saw Caterpillar repeatedly post stellar sales and earnings numbers.

The company started out with a bang, posting a 400% jump in earnings in its record first quarter. But it didn't stop there. Caterpillar's second- and third-quarter revenue grew at 37% and 41%, respectively, as it continued to see strong demand for its products. Caterpillar's $8.8 billion purchase of Bucyrus International in July will help the company tap into strong demand for mining equipment, especially in emerging markets.

Deere (NYS: DE) is another company that one wouldn't expect to nearly make this 10 worst performers list. But the company's stock has lost 7.4% of its value so far in 2011 despite it posting solid earnings quarter after quarter. In its recent quarter, the company saw its profits rise 46% year over year on 20% revenue growth. Deere's increasingly strong presence in emerging markets has it positioned well for the future, as the company increased equipment sales outside the U.S. and Canada by over 30% in its third quarter. Demand for agricultural equipment worldwide continues to be solid, making Deere an intriguing play for 2012.

These machinery companies had a lackluster 2011, but if you're looking for a strong outperformer in the year ahead, you're in luck. The Motley Fool has created a brand-new free report called "The Motley Fool's Top Stock for 2012." It highlights one company that we've picked out for explosive growth ahead. You can get instant access to the name of this company by clicking here -- it's free.

At the time thisarticle was published Brendan Byrnes owns no shares of any company mentioned here. The Motley Fool owns shares of Joy Global. Motley Fool newsletter services have recommended buying shares of Actuant and Illinois Tool Works. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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