In the months prior to the credit crisis last fall the rail industry was experiencing a phenomenal boom.

Fuled by commodities, companies that operated in the sector were generating significant amounts of cash flow on ever increasing demand for freight.

Rail companies were able to lock in trips in advance at high rates making it easy to project operating performance. Given that many stocks in the group traded for low multiples of earnings, many investors believed rail companies offered incredible value in the market.

Look no further than Warren Buffett’s Berkshire Hathaway and its large stake in rail company, Burlington Northern (BNI). The investment made sense to this Rational Investor.

All was going smoothly in 2008 until the economy hit a brick wall in the form of a massive credit crisis last fall. The resulting trail of destruction left few parties without damage including the rail industry.

One of the many victims of the carnage was FreightCar America (RAIL). RAIL is in the business of manufacturing, selling and leasing rail cars to the freight industry. Like many companies the stock lost half its value during the crash last year.

The stock has bounced along its bottom of $16 per share since. With questions about the economy and the length of the recession investors have been reluctant to buy shares.

That is understandable, but a bit too short term in thinking. Rail cars during a normal economic environment play a key role in shipping goods. With population growth combined with the global economic growth story demand for rail cars can be expected to be higher.

The company has a strong balance sheet and is profitable even though those profits are being pressured by the downturn. Analysts currently expect 2009 earnings of $.90 per share. That puts the stock at about 18 times forward earnings at the current price of $17 per share.

The recovery will not happen overnight, but if you have a longer term horizon, RAIL is attractively priced in my opinion. There may be more downside, but this company has the potential to earn well over a buck a share in the long term especially as economies around the world re-inflate.

Navellier’s PortfolioGrader rates RAIL a C or hold.

This article was written by Jamie Dlugosch, contributor to InvestorPlace Media. For more actionable insights likes this, visit www.InvestorPlace.com.