Opinions
Bruce Tatters
Cummins
CMI-N
COMMENT
Sep 22, 2015
$113.270
Stock price when the opinion was issued
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BUY
He's a big believer in hydrogen fuel cells, a source of energy the world needs. CMI is one hydrogen company with real earnings that has invested heavily in hydrogen. They are a leading maker of truck engines. Also, they made a series of acquisitions in the past 5 years to build an impressive portfolio of hydrogen technologies, like the first hydrogen-powered train, airplane and fueling station and this year they build a device to cleanly extract hydrogen from water.
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BUY ON WEAKNESS
They reported a blow-out quarter, sending shares 9% higher. They beat revenues in 4 of their 5 largest divisions, boasted expanded marginsThey are part of the transition to nuclear energy, even though it will likely get less support under Trump, at a pace that will match customer needs. Also, he likes their power systems business (generators, commercial power systems for buildings), timely during the data centre boom. Caveat: While only 9% of their sales come from China, those could be hit by Trump tariffs.
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One of the global leaders in diesel engine technology. Has been a fabulous company since early 2000. It has followed a lot of the global growth in truck manufacturing. Has been weak lately because emerging markets have been weaker, and the order books out of some of those areas have been slow. Trucking in general had some headwinds 2-3 years ago with the $100 oil. Long-term this is a great company. Looking for it to grow earnings probably in the 10% rate over the next 3-5 years. Valuation is quite low right now. On his watch list and he is waiting for the US$ to settle down a bit. Attractive at this price.