Skip to main content

Small Cap Profile: Wabtec (WAB) - Jul28

Briefing.com

Stock Brief

Updated: 28-Jul-05

Small Cap Profile: Wabtec (WAB)

[BRIEFING.COM -- Robert J. Reid] Railroad stocks are hot these days. Demand for coal continues to surge, which in turn drives demand to transport the coal via rail. Railroad stocks are posting nice gains, prompting many to upgrade and build their fleet and infrastructure. Wabtec (WAB) is one of the world's largest providers of equipment and services for the rail industry and has a 50% market share for braking equipment.

If you have any ideas, comments, or questions, please email rreid@briefing.com.

Key Points

  • Wabtec (WAB 23.33 +0.07) is one of the world's largest providers of equipment and services for the rail industry.
  • Background: Products include brakes, draft gears, couplers, air compressors, railway electronics (event recorders, control and monitoring equipment, and end of train devices), friction products, door assemblies, heat exchangers/cooling systems etc.
  • Dominant Market Share: The co believes it holds a 50% market share in North America for its primary braking-related equipment and a number 1 or number 2 position for most of our other product lines. and for customers, can be found on virtually all U.S. locomotives, freight cars and passenger transit vehicles.
  • Strong Growth: The co is posting strong growth. In Q2, sales rose 31% yoy to $270.2 mln and EPS rose 60% to $0.32. The co is expected to earn $1.48 next year for a p/e of 15.8x on 33% EPS growth. The p/e is attractive given the co's growth characteristics.
  • Strong Results Illustrate Huge Demand for Rail: FrieghtCar America (RAIL), which makes rail cars to haul coal, recently posted a blowout quarter. RAIL's backlog of unfilled orders has reached 15,867 units, nearly double the backlog a year ago. Portec Rail Products (PRPX), which makes rail joints, rail anchors and spikes, railway friction management products, etc., reported strong Q2 results. Strong results from the rail sector (CSX, NSC) show demand for rail transport, especially coal, is booming. Coal producers Massey Energy (MEE) and Arch Coal (ACI) report strong demand for coal, and the rail needed to transport it. Specifically for WAB, Arch Coal talked about transportation problems via railroad due to floods and mudslides. However, railroads are now performing major maintenance on the entire joint line rail system in the Powder River Basin.
  • Should Benefit: With RAIL confirming such a hot coal market and FCL numbers indicating that coal prices set to remain high, we would expect railroads to continue upgrading their lines to meet the demand of the coal cos. Wabtec is clearly in-line to benefit as evidenced by its strong Q2 report.
  • Technicals: The trading action has been positive as the stock has steadily climbed higher. WAB has seen great action between its Oct 2004 peak of 22.70 and its early July high of 22.56. Stock is trending higher nicely. We like it above its 50-day simple ma currently at 21.36.
  • Bottom Line: Railroad stocks are hot these days. Demand for coal continues to surge, which in turn drives demand to transport the coal via rail. Railroad stocks are posting nice gains, prompting many to upgrade and build their fleet and infrastructure. Wabtec (WAB) is one of the world's largest providers of equipment and services for the rail industry and has a 50% market share for braking equipment.

--Robert J. Reid, Briefing.com

Copyright © 2005 Briefing.com. All rights reserved.

__________________________________________________
Do You Yahoo!?
Tired of spam? Yahoo! Mail has the best spam protection around
http://mail.yahoo.com

Comments

Post a Comment

Popular posts from this blog

Tracking Short List 2/10/09

With thoughts of a prolonged recession and increased savings rate from consumers, it means upscale spending should continue to be down even as the economy improves. This should affect Saks (SKS) and Tiffany's (TIF) and WFMI and Nordstrom's. It is also reported that casino business was down in December. That should affect LVS, MGM, WYNN, BYD. I haven't had a chance to review these stocks or add more. Just noting it with plan to review soon for action.
Post a Comment
Read more

Planning for investments and trading

I'm reading a book titled "Come into my Trading Room" written by Dr. Alexander Elder. He talks about trading and investing psychologies and the critical nature to planning of mind, method and money. A takeaway for me was the thought of fear and greed and the awareness of these feelings in the market and yourself in your trading. This also coincides with the entry in the markets as entertainment. The excitement of the trade - getting carried away with the potential for gain and disappointment of losses. It is similar to the casino and the racetrack with so many bets to make.... The key to the money aspect is managing your trades to be diversified and not enter all-in or all-out situations. This is difficult unless you really focus on it. One of the things holding back my trading is following too many stocks and this paralyzes me from making a decision. I want to make the perfect trade and that's because I'm doing an all-in. I can't enter for fear of losi...
Post a Comment
Read more

Stocks and sectors to track - methods to utilze...

These are interesting and challenging markets - volatile and confusing. There are also many instruments and tools at your disposal. ETFs are ways to make sector bets - there are 2x and 3x volatility versions. Of course, other methods are using coverered calls for income and spreads for growth. Here is a large list of tickers, roughly 80 in the BigWatch> AAPL AKAM AMAG APOL BRCM CECO CELG CMG COST CREE DGIT DRIV ENER FSLR GILD GLW GOOG IMGN INTC JPM NFLX NVDA RHT RIMM SLAB SNDK SPWRA STP VMW WFR IBN INFY ACH BIDU CTRP EDU NTES SNDA ERJ MELI FLS FLR SGR MDR SQM AVAV AUY FCX KGC CCJ NRG MOS MON POT MVL DRYS BG BHP RIO VIP AMSC APA ATW CHK COG DO ESV GHM HES ITRI LDK NE NFX RIG STO SU PCZ SUN SYT TSO VLO ZOLT USO DIG DUG GLD GDX PBW SLV EEM FXI FXP EWZ TBT and then the Biotech Watch> ABII ACOR ALTH AMAG AMED AMGN AMLN BABY BIIB BMRN CELG CEPH CYBS CYPB EBS ENDP GENZ GERN GILD HOLX ILMN IMGN ISRG KNDL LIFE MDVN MEDX MELA MNTA MYGN ONXX OPTR OSIP PDLI SGEN SLXP SQNM TEVA THOR VIVO V...
Post a Comment
Read more