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TheStreet Open House

13 Small-Caps Crushing Analysts' Views

Stocks in this article: RAILJRNRRGB

Freightcar America

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Talk about a cyclical stock. Demand for Freightcar America's (RAIL) freight cars can dry up in a down economy as shippers simply don't have the need to justify a current fleet size. But when the economy pivots back to growth, shippers make a mad dash to line up new orders.

In hindsight, it's pretty clear that the shipping industry's needs were sated back in 2006, when this company shipped more than $1.4 billion worth of freight cars. That helped push EPS above $10. Sales then fell sharply for five straight years, bottoming out below $150 million in 2010. A rebound to $487 million in 2011 shows how much demand has picked up. Fourth-quarter results were the strongest yet, in terms of cars shipped and pricing, leading to the strongest quarterly profits in a number of years.

Better still, a 32% sequential spike in backlog sets the stage for continued strong growth. "The better than expected orders reaffirm our view that rising coal car deliveries over the next 2-3 years will be driven by coal car replacement despite the headwinds domestic utility coal is facing," note analysts at Sterne Agee. They see shares rising from a recent $27 to $35.

Freightcar America was also featured recently in " 8 Stocks Rising on Huge Volume."

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