Cummins Inc.
designs, manufactures, distributes and services diesel engines for heavy,
medium and light duty trucks, autos, buses as well as industrial, electric
power generation and engine related components markets. The company has grown profits and dividends
at a 12-20% rate over the last ten years earning a 20%+ return on equity. Like most heavy industrial firms, CMI earnings can be somewhat volatile. However, it should continue to grow at an
above average pace as a result of:
(1) it is positioned to benefit from trends in
emission standards, fuel economy, increased demand for electricity and
infrastructure investments,
(2) introduction of new products,
(3) growing usage by OEM manufacturers
(4) an aggressive stock buyback program.
Negatives:
(1) economic weakness has a major impact on
sales,
(2) it is in a highly competitive industry.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2004
Ind Ave 1.7 4 16 NA
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
Ind Ave 38 15 NA 7 NA
Chart
Note:
CMI stock made great initial progress off its November 2008 low, quickly
surpassing the downtrend off its July
2008 high (straight red line) and the November 2008 trading high (green line). Long term, the stock is in an uptrend (blue
lines). Intermediate term it is in an
uptrend (purple lines). The wiggly red
line is the 50 day moving average. The
Aggressive Growth Portfolio owns a 75% position in CMI. The upper boundary of its Buy Value Range is
$123; the lower boundary of its Sell Half Range is $228.
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