New safety regulations affecting railroad tank cars will create an opportunity for investors, according to Ryan Thibodeaux, president of Baton Rouge-based investment firm Goodwood Capital Management. As highlighted in a recent article by Barron’s, Thibodeaux says while rail car orders have fallen off in the past six months, new standards for rail cars carrying highly flammable material could force railcar owners and lessors to replace or retrofit as many as 80,000 cars over the next three years—a revenue opportunity he believes could be worth as much as $8 billion to $10 billion.
“We like that space,” he says. “That’s why we’re invested heavily in it.”
Goodwood Capital Management owns shares in Trinity and Greenbriar, two of the three tank car manufacturers in the U.S., in its small- and mid-cap portfolios.
That Gulf Coast industrial construction boom also will help fuel demand for new tank cars, Thibodeaux says. He argues that Wall Street investors have underestimated the tremendous opportunities that industrial expansion and new construction projects will create—not only for rail car companies, but also for a variety of industrial service companies.
“There are so many companies that will benefit with all the industrial expansion going on along the Gulf Coast and it is really underappreciated outside of this region,” Thibodeaux says. “In New York and San Francisco they could care less, which is stunning because they’re overlooking an opportunity that is huge.”
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—Stephanie Riegel
