Robert Nabloid

How Will Cummins Do in a Recession?

The price of Cummins stock has jumped a lot in the past few years (they've done remarkably well). I don't know if it's the best time to get in BASED on current valuation with the economy going into a big recession. What I do know is that Cummins is the leader and has a very bright future and will continue to dominate and steal market share. Their engines are meeting environmental standards way in advance while many of their competitors struggle! They are set to do VERY well based on market share in their industry. I just don't know how big the economic contraction will be based on the downturn. At the other end of this economic down turn, Cummins will do very well!

From what I remember, and correct me if I'm wrong, Cummins in the past has had to LIMIT their sales to China (and elsewhere) or they wouldn't have enough engines to satisfy the domestic markets. I also remember Cummins engines being sold out way in advance?? (My memory might be sketchy).

What I know is they are also going into natural gas and the drilling industry in a big way and taking market share. Cat got out of the trucking business altogether (for a while) and it was one of the big 3 players. (Cat, Cummins and Detroit Diesel...) Detroit Diesel's solution to the environmental standards is okay but Cat really struggled and that is one of the reasons they exited the market (I think). I'm a bit biased. I have a relative that works (diesel tech) for a Cummins service branch and I know many of the people that work in the local Cummins branch... and at the branch level they are still expanding in my market (building another building, hiring people, etc). I also know many people that work in the local Detroit Diesel branch and it doesn't seem to be as brisk or busy as Cummins, though in my market Detroit Diesel's service branch is a lot bigger in physical size and they have a larger share of the drilling market (for the time being... that looks to be changing!). (These are service/sales branch's, not the parent companies... but they may serve well as a proxy to see if the parent company is busy - but it only tells the tale from a single market... the entire picture isn't seen by me.).

Out of the three big diesel manufactures - Cummins is the one with the brightest future, IMHO.