Major ‘Number Bump’ Potential at Cummins?

“Right now the raging bull market in trucks is one of the hottest things going,” Cramer said Wednesday, and that makes engine-maker Cummins a stock to watch.

For some reason, though, the market doesn’t think so. Despite reporting a stellar quarter on Tuesday—a 3-cent beat on revenues that were up 22 percent year-over-year, and international sales soaring—the stock added just $1.50 that day and then pulled back 52 cents today. Turns out investors didn’t like Cummins’ typically cautious guidance, and that’s why the stock didn’t move.

But Cramer thinks good—great—things are in store for this company. Already up 53 percent just since his June 2010 recommendation, he predicted there’s still more room to run. What with the U.S. enjoying a massive truck-replacement cycle and that strong overseas business, the company’s guidance of $16 billion seemed too cautious to Cramer.

Regardless, though, if you couple that number with similar margins to last quarter, Cummins could earnings $8 a share in 2011—much better than the $7 the Street expects.

That translates into “major number-bump” potential, Cramer said, which translates into a higher stock price, too.

Ultimately, Cramer thinks the earnings potential here is as high as $10 a share, especially as the North American truck market recovers, which he said was the next big driver for the stock price. To find out if he’s right, he asked Cummins Chairman and CEO Tim Solso for an interview. Check back soon for the video.

When this story published, Cramer’s charitable trust owned Cummins.

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