Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
Cummins Inc. (CMI-N) -- $22-billion (U.S.) market cap)
· Designs diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, it currently employs approximately 54,600 people worldwide and serves customers in approximately 190 countries and territories through a network of approximately 600 company-owned and independent distributor locations and approximately 7,200 dealer locations.
· Trades for just 13.3 times trailing 12-month EPS
· Has grown EPS at a 15-per-cent clip over the long term (using average of 3-, 4-, 5-year EPS growth rates)
· Offers 3.2-per-cent dividend yield
· Peter Lynch model likes its 0.72 yield-adjusted P/E-to-growth ratio
· Has a 2.2 current ratio, a sign of good liquidity, according to the Benjamin Graham-based approach
· Net current assets are more than 3x long-term debt ($4.9-billion v. $1.6-billion), which the Graham-based approach likes
· Debt/equity ratio (22 per cent) well below industry avg (83 per cent), which the Martin Zweig-based model likes
· Has a 10-year avg return on equity of 23 per cent, which the Buffett model likes
John Reese is long CMI.
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