Monday, July 09, 2007

Take a Ride with FreightCar America

FreightCar America (RAIL) has a market cap just over $600 million, a pre-tax Earnings Yield of 46%, and a pre-tax Return on Capital over 100%.

The company makes railroad cars, primarily for carrying coal. Coal production, and therefore, orders for new railcars, is down recently. However, new coal-burning plants are coming online soon and aging railcars will need to be replaced with FreightCar's new lighter aluminum cars that can carry more coal. There's also the potential for sales to China.

RAIL pays a nominal annual dividend of $0.24/share, and its shares are currently $50.26, giving a yield of less than half a percent.

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