With shares of Cummins Inc. (NYSE:CMI) trading at around $105.82, is Cummins an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Cummins designs, manufactures, and distributes diesel and natural gas engines, electric power generation systems, fuel systems, and more. The global economy has been and will continue to be the most important factor for Cummins. If you look at the max stock chart, you will see that Cummins has performed exceptionally well during bull runs and poorly during recessionary times. If the global economy continues to recover, then Cummins has phenomenal potential, which would mostly relate to the sale of new engines. If the global economy doesn’t recover, there will still be demand… and there will still be a decent yield. Cummins has increased its dividend consistently over the past decade despite some challenging environments.
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The following information is from southerngas.org: “For those of you who may have missed it, Cummins-Westport recently announced they have begun development of a natural gas version of the Cummins 6.7 liter ISB engine which will be ideally suited for medium duty trucks, Class C school buses, vocational applications, etc. The 6.7 liter will join their current lineup of 8.9 and 11.9 liter natural gas engines and the 15 liter engine Cummins announced back in March so there will be a natural gas option for just about any size vehicle in the near future.”
As you can see, Cummins is setting itself up for the future in strategic fashion. Now let’s take a look at some important numbers.