Some Transports Are on the Right Track

Railroads

Railroads will be highly challenged in 2009. This small group profited for several years from a number of supportive factors that are no longer in play in our recession-bound economy. In particular, the historic coal collapse could undermine railroad carrier performance for months or years to come.

The wild card next year will be the Obama factor. We know infrastructure funds will be earmarked for rapid transit systems nationwide, which is likely to benefit railcar builders and tracklayers. What we don't know: whether the handouts will seep into the broader rail system. Even so, that won't address the demand side of the equation.

Wabtec Corp. (WAB)

Click here for larger image.

Source: eSignal

So I'd stick with the obvious plays here. Wabtec (WAB - commentary - Cramer's Take) builds industrial and passenger rail transit components worldwide. It's also headquartered in Pennsylvania, which offers a great opportunity for congressional Democrats to reward local politicos for working that state into the winning column in the national elections.

The stock sold off from an all-time high in September, breaking two-year support at $40. It's holding above the 2006 and 2007 lows, which is mildly bullish. However, there are still no buy signals, so it's best to stand aside for now and wait for price to remount broken support. That event could presage a strong bounce into the $50s.

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At the time of publication, Farley had no positions in the stocks mentioned, although holdings can change at any time.

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