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The ongoing growth in commercial and industrial loan activity suggests Terex (NYSE:TEX) has substantial tailwinds heading into 2013. The higher loan activity is driving increased private spending on construction projects, particularly those well suited for Terex cranes and lifts.

Terex fortunes are uniquely tied to non-residential construction.

Their aerial lifts, which account for 29% of sales, help customers build, remodel and maintain everything from buildings to power lines.

Fixed and mobile cranes, which generate 21% of sales, are deployed for larger projects.

And construction machines like excavators, backhoes and dump trucks, which make up another 16% of revenue, help build roads and clear construction sites.

The company gets another 26% of its sales from materials handling and port solutions. These solutions include specialty cranes, hoists and drives used in moving containers safely through ports.

Construction spending suggests earnings upside.

In 2013, analysts expect the company to earn $2.57 per share, giving shares a forward PE of 10.4.

Given the current level of construction spending, the company's earnings leverage may be under-estimated. If so, upward revisions are likely through 2013 as non-residential construction spending accelerates.

Low interest rates continue to fuel commercial and industrial loan growth, supporting investment in capital equipment. In November, C&I loans at commercial banks increased to $1481.2 billion, up from $1451.23 billion in July and $1317.72 billion a year ago.

As a result, private non-residential construction spending increased 10.7% year-over-year in October. Spending on power, transportation, education, office and lodging projects all increased more than 15%.

These markets are key customers for Terex aerial lifts, cranes and construction machinery. Additionally, the company should see post-Sandy reconstruction demand for road building and utility segments.

Earnings expectations may mean higher prices.

If analysts are right, earnings will increase 27% next year. Simply extrapolating its current 14 price to earnings ratio against current FY13 estimates gives a back of napkin target price of $36, up 34% from here.

Since the company has outpaced analysts in each of the past four quarters by an average 29%, shareholders could find analysts playing catch up. If so, investors may want to consider picking up Terex for portfolios.

Disclosure: I am long TEX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: The Case For Terex Corporation In 2013