Sunday, June 3, 2018

The Wall Of Worry Looks A Little Higher At Cummins

Every company has risks and challenges and Cummins (CMI) is no exception, even if some of those risks are pretty familiar (end-market cycles, the risk of vertical integration). While the prospect of electric trucks is a newer challenge, as is a recent product quality/warranty issue, there's really never been a time I can recall when there wasn't some threat hanging over the shares.

While I think some of the risks and worries are overstated, I don't necessarily find these shares cheap today. I could see paying up into the mid-$150s for the shares, but that's not really all that much upside given where we are in the cycle. What's more, it seems like Cummins gets a little more benefit of the doubt than other component companies - some of the same sell-side analysts who believe that electrification will crush Allison Transmission (ALSN) are more sanguine on Cummins' future in an EV world.

Read more here:
The Wall Of Worry Looks A Little Higher At Cummins

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