Cummings CMI and my energy play
Posted in :
My 2 cents on Cummins CMI (a while ago)
I have watched CMI for a few months now, have not pulled the trigger yet. There was a brief chance around March 17. I dare not to buy it after it went above 50. Like commodity, short term CMI has some selling pressure because:
1) It’s an infrustructure/transportation play, with US/global economy slow down, its business should also slow;
2) At Micro level, I know Dodge Ram trucks use CMI diesel engine. Chrysler just announced the Ram production cut, so…
But I still like it because their diesel engines are very very good. I know very few manufacturers can make their quality diesel engines. A related thing, is the bio-diesel, if this becomes a reality, diesel engine will be more popular.
Today CMI got a huge lift after reported strong earning (seekingalpha: cummins engine chugs along nicely).
My energy plays
Oil, natural gas and oil services. I have Marathon Oil (intergrated oil), Chepeseake Energy (NG), Devon Ennergy (NG). And yesterday I added Smith International (oil service).
I like oil because I believe the global oil supply and demand will continue to be challenging in forseeable future, due to the demand surge in China and other developing countries. Natural gas is a more local play because of the difficulty in shipping and storage, but it will be a real alternaive to oil in the US. Oil service is my favorite, as the old story goes “Levis made fortune by selling pants to gold miners”. But we know not many of the gold miners found gold. BTW, I ordered about 13 free annual reports via Kiplinger subscriber service, they arrived last Friday. There are 9 oil related reports among the 12. The reports are:
Canadian Natural Resources Ltd.
Chesapeake Energy Corp. (CHK)
Marathon Oil Corporation
Seagate Technologies (STX, did not arrive)
Sherwin Williams Company
Suncor Energy Inc.
Tesoro Companies, Inc.
Weatherford International Inc. (WFT)
So far I found CHK and WFT reports to be interesting 🙂