Cummins Inc. [stckqut]CMI[/stckqut] serves a well-established and growing market, a market that is central to our goods and economy. The company has a healthy financial situation in all aspects including debt and a well-covered dividend. The market is currently pricing in a dramatic decrease in revenue and income for the next year but estimates are predicting a much more muted decrease.
With diesel prices at levels lower than recent years, it allows the company to serve a more enticing market. Any slowing found in international markets is outdone by the massive growth seen in domestic markets which makes up a majority of the revenue anyway.
With cash steadily flowing in and a dividend that has plenty of room to run, I see this as an opportunity to initiate and accumulate shares of the company. The stock has fully valued share price of $130 while the market currently is pricing it in the high $90s. This separation of market pricing to valuation confirms for me that now is a time to add CMI to my portfolio.