Caterpillar Inc. (CAT), Cummins Inc. (CMI): Companies for a Gasoline-Free World

Page 1 of 2

What are the main differences between a diesel engine and a gasoline one? Both are internal combustion engines, but the combustion occurs in different ways.

In a gasoline engine, fuel is mixed with air, compressed by pistons, and then ignited via a spark plug. On the other hand a diesel engine compresses the air first, thereby heating it up, and then the fuel is injected. When fuel comes into contact with the hot compressed air, it ignites and powers the engine.

Both normally run on petroleum based diesel, although diesel fuel can be created using other sources. Researchers at the University of Nevada-Reno have successfully produced biodiesel from used coffee grounds.

Diesel engines are initially more expensive than their gasoline counterparts. However, they are much more durable, and can typically run for much longer without needing repair or replacement. Another difference is that gasoline engines typically have more horsepower, while diesel engines have more torque. That means that while a gasoline engine can accelerate faster, diesel engines are indisputably better suited for moving heavy loads.

Caterpillar Inc. (NYSE:CAT)

One of the Dow’s cheapest stocks

Caterpillar Inc. (NYSE:CAT) said in its latest annual report that it is the world’s leading manufacturer of diesel engines. Sales of diesel engines are a part of its energy & power systems segment, which accounted for approximately 32.1% of 2012 revenues.

As the global economy goes, so goes Caterpillar Inc. (NYSE:CAT). The stock has been fairly volatile in recent years. Bad macroeconomic news can send it down, and vice versa. But when this stock gets hammered, it presents investors with an opportunity to pick up a high quality company at a reasonable price. Caterpillar Inc. (NYSE:CAT) currently sports a P/E ratio of 11.68, well below the DJIA average of 17.7. The balance sheet looks solid with working capital of $13.71 billion and equity of $18.3 billion.

Caterpillar Inc. (NYSE:CAT) currently yields a dividend of 2.8% of its recent stock price, with a very reasonable 27% payout ratio. The dividend history is also solid — the company’s Investor Relations section of its website has dividend data going back to 1996. Since then, on a split-adjusted basis, the company has never lowered its dividend. In those 17 years dividends have grown at a CAGR of 11.1%.

When I think of diesel engines

I think of Cummins Inc. (NYSE:CMI). This company is one of the top players in the global market for diesel and natural gas engines. It should be a major beneficiary of the impending shift away from gasoline powered engines. The company has received a multitude of awards for things ranging from environmental responsibility, to its commitment to conducting business in an ethical manner.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!