Don't underestimate the sex appeal of Cummins' diesel engines. The company posted a record $1.04 billion profit in 2010. Though the stock has more than doubled in the last year, it may have plenty of fuel left.
Last year's strong performance came as sales rose more than 70% in China and Brazil and almost 40% in India, which helped to more than offset the ongoing decline in the North American truck engine market.
While international sales will continue to strengthen, Mark Schultz, senior portfolio manager of the MTB Mid-cap Growth Fund (ARMEX), says the company has a long runway ahead of it.
"Cummins is going to benefit from a huge rebound in truck orders domestically this year as the economy recovers and fleets rebuild," he said. The company is forecasting sales to jump more than 20% in 2011.
Schultz added that the shift to tighter emission standards will also improve Cummins' business. And Goldman Sachs analyst Jerry Revich thinks Cummins shares will climb more than 20% this year to $135.
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