American Railcar Industries (ARII)
There’s nothing particularly sexy about rail cars — especially when they are covered in graffiti. However, there’s big money to be made building those cars that are needed to supply the shale boom. American Railcar Industries (ARII) is chasing a bright future by doing just that.
ARII is one of the leading producers of tank cars and has benefited greatly from the crude-by-rail movement. As regions like the Bakken and Eagle Ford lack sufficient pipeline infrastructure, the refiners have be using rail roads to ship crude oil out of these fields and into their facilities. That torrid growth has caused a lack of tank car supply and ARII is filling that niche.
Recent deals with oil and gas majors like Chevron (CVX) have made ARII’s backlog for new rail cars jump to a whopping 6,300. That’s almost as many cars it shipped altogether in 2012. Those backlog orders and tank car leases have also helped ARII beat earnings estimates in the last few quarters.
For investors, American Railcar could be one best sleepy plays on the shale boom.