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The worldwide crane market was crushed during the financial crisis and still hadn't recovered as 2010 ended, even though several industrial and mining equipment manufacturers have already recovered to pre financial crisis levels such as Caterpillar (NYSE:CAT), Joy Global (JOYG) and Bucyrus (NASDAQ:BUCY).

Fortunately for U.S.-based crane makers, Q1 2011 saw a surge in orders and finally signals of a market recovery. Both Manitowoc (NYSE:MTW) and Terex (NYSE:TEX) saw huge backlog increases in the crane segment. MTW had a nearly 40% increase in backlog to $800M from the $572M reported at December 31st. TEX had a 30% increase in backlog and like MTW saw plenty of demand in North America. The total went from $774M to $1,004M.

Both companies saw improving results overall, but the backlog is what drives the stock price. Or at least, what usually drives the stock price. Both stocks have been slaughtered after the Q1 earnings reports, even after initial positive bumps.

Is the rally over for crane stocks? How is it that global growth just ended right after the first signs of construction growth? The cycle usually lasts for 3-5 years so it seems bizarre for investors to sell these stocks offf 25% from April highs once the green light has been given for future growth.

Both stocks continue to lag 2007 highs by a long shot. TEX had a high of $96.94 on July 16, 2007. MTW hit its high on December 26, 2007 at $51.49. No guarantee they'll ever reach those levels again, but its very likely that global growth will once again see higher demand. Both companies would need 200% gains just to reach those highs from over three years ago.

CAT conversely hit a high of $87 on July 17, 2007, and easily surpassed that recently by reaching over $115. Sure, CAT now has a lot more exposure to the very hot mining sector, especially since TEX sold its mining business to BUCY last year. Notice though how CAT and TEX hit those 2007 highs within one day of each other and now CAT has extremely outperformed TEX.

Now seems like the time for MTW and TEX to rebound and not sell off. Their main market of cranes has finally turned and should catch up to the mining and agriculture sectors. Not to mention that they haven't benefited as much from the global rebound and conversely shouldn't have sold off more then CAT which is only down roughly 10% from recent highs.

MTW and TEX appear to be better buys now as their sectors are just now recovering.

Source: Crane Manufacturers Report Surging Orders, Yet Stocks Slump