Cummins: Sentiment Showing Even Wilder Swings Than The Business

Cummins (CMI) is a cyclical business, always has been and likely always will be, and yet, you still see analysts and investors who treat every cyclical peak and cyclical trough like the new normal. Sentiment has shifted significantly in the last few months, with the stock dropping close to 40% during the March panic but then shooting back up on what I believe may be premature enthusiasm that the worst of the downturn is now understood and “in the numbers”.

Make no mistake, I think Cummins is a great company, and I think management made smart choices to prepare for this downturn. I also think that while the company has been slow to invest in powertrain electrification technologies (particularly axle-centric technologies), it has made it up for that somewhat with other investments. My bigger issue is sentiment. Cummins would seem to offer a decent return now, but I think there could be another pullback after this strong rally, and that’s where I’d look to get more aggressive.

Read the full article here:
Cummins: Sentiment Showing Even Wilder Swings Than The Business