4-Star Stocks Poised to Pop: Cummins

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Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, engine maker Cummins (NYSE: CMI) has earned a respected four-star ranking. While five-star stocks have been the best performers, our data has shown that four-star stocks still outshine the market by a significant margin and shouldn't be taken lightly; conversely, low-rated stocks have woefully lagged the market average.

With that in mind, let's take a closer look at Cummins' business and see what CAPS investors are saying about the stock right now.

Cummins facts

Headquarters (founded)	Columbus, Indiana (1919)
Market Cap	$4.1 billion
Industry	Diversified Machinery
TTM Revenue	$14.6 billion
Management	CEO Theodore Solso (since January 2000) CFO Pat Ward (since April 2008)
Return on Equity (average last three years)	27.3%
Dividend Yield	3.5%
Competitors	Caterpillar (NYSE: CAT), Emerson Electric (NYSE: EMR)
CAPS members bullish on CMI also bullish on	General Electric (NYSE: GE), Apple (Nasdaq: AAPL)
CAPS members bearish on CMI also bearish on	EOG Resources (NYSE: EOG), Starbucks (Nasdaq: SBUX)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 900 of the 945 members who have rated Cummins -- some 95% -- believe the stock will outperform the S&P 500 going forward. These bulls include OleDrippy and jirvineuk.

Last week, OleDrippy stated a simple bull case for Cummins: "Best of breed, taking over CATs market share, been obliterated along with the rest of the market... Has a lot of upside potential when investors flock to companies who make 'stuff.'"

In a pitch from one week earlier, jirvineuk agrees, elaborating on rival Caterpillar's departure from the playing field. Here's an excerpt:

Their largest competitor in the diesel engine business was Caterpillar, who recently announced that they were abandoning the loose engine market. Leaving Cummins to gobble up their 25-30% market share. So Cummins sales and profits are doing well and as they take over more of Caterpillar's business, they have built-in growth potential. There's no reason for their stock to be down to half of their "normal" price other than lots of money leaving stocks for "safer" investments. ... Due to the economy, you can expect durable goods to decline for the next several months. But Cummins will be less affected by this due to taking over the Caterpillar markets.

What do you think about Cummins, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.