On Track with Trinity
09/03/2014 8:00 am EST
Our latest recommendation is the leading manufacturer of railcars in North America; the company stands to gain from one of the most prominent megatrends in North America—the US shale oil boom—asserts Nicholas Vardy, editor of Bull Market Alert.
You’ve already heard that the US energy boom has transformed the United States into a larger oil producer than Russia—and soon—Saudi Arabia.
What you probably haven’t heard is that the shale oil boom has caused US rail traffic to explode. The number of crude oil shipments in tank cars has risen from 4,000 carloads in 2006 to 400,000 in 2013. That’s a 100x increase in just seven years.
Not surprisingly, the number of rail accidents has also soared, along with the calls for new safety regulations. Anxious to avoid onerous government intervention, the oil industry is already taking action to upgrade tank cars to meet new, stringent safety requirements.
This massive upgrade cycle has caused demand for railcars to explode. Last quarter alone, Trinity received orders for 9,880 new railcars. Trinity Industries (TRN) now has a record backlog of orders totaling a whopping $6.5 billion.
No wonder Trinity’s sales and earnings estimates keep being revised upwards. Last quarter, Trinity reported revenue growth of 39% to $1.5 billion and net income growth of 94% to $164.2 million, compared to the same quarter last year.
Trinity also increased 2014 full year earnings per share (EPS) guidance to between $3.90 and $4.10, up from $3.50 to $3.75. This compares to 2013 EPS of $2.38, a 64-72% increase. Trinity is a hot stock in a hot sector. So, buy the shares at market today, and place your initial stop at $41.00.
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