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Cummins Inc.: The Bull Case for 2016

By Neha Chamaria – Mar 8, 2016 at 8:00AM

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After a strong start to the year, is Cummins stock poised to head higher?

Cummins is more than just an engine maker. Image source: Cummins Analyst Day Presentation, November 2015

After wiping out nearly 40% of its market cap in 2015, Cummins (CMI 2.23%) stock is showing visible signs of a turnaround this year. The stock was up 15% year-to-date, as of this writing, recovering at a faster pace than rival Caterpillar (CAT -1.86%) which is up only 6% so far this year after losing about 30% value in 2015.

So is the worst over for Cummins? While Caterpillar's fate depends a great deal on commodities thanks to its substantial exposure to cyclical industries like mining and oil and gas, Cummins' fortunes are tied more closely to the transportation sector, which hasn't been hit as hard. In fact, Cummins' recent earnings report gave interesting insight into its market share, margins, and shareholder returns which should give the bulls ample reasons to cheer. Take a look at the slideshow below to know more.

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Neha Chamaria has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Cummins. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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