Growth at a reasonable price is getting harder to find after the recent rally and with economies slowing worldwide. One stock that has popped up on my radar recently is Trinity Industries (TRN), which is on track to double earnings from FY2011 to FY2013 and is selling at very reasonable valuations.
Trinity Industries provides products and services to the industrial, energy, transportation, and construction sectors primarily in the United States, Canada, Mexico, the United Kingdom, Singapore, and Sweden. (Business description from Yahoo Finance)
7 reasons TRN is a cheap growth play at under $31 a share:
- The company has beat earnings estimates 11 of the 12 quarters. The average beat over consensus over the last four quarters has averaged 20%.
- Consensus earnings estimates for FY2012 and FY2013 have risen significantly over the last two months.
- The stock has garnered S&P's highest rating "Strong Buy" and a $40 price target as well.
- TRN is selling near the bottom of its five year valuation range based on P/E and P/CF. The stock pays a 1.4% dividend yield as well.
- Trinity ended the second quarter with a record backlog ($3.2B) for railroad cars, which should keep its factories humming for quite some time.
- Earnings are moving upward at a great clip mainly as result of this demand. The company made $1.65 a share in FY2011 and is on track to make $3.07 in FY2012. Currently analysts project $3.51 of EPS in FY2013.
- The company should grow revenues just under 30% this year, has a five year projected PEG of 1 and analysts expect just under 10% sales growth in FY2013.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TRN over the next 72 hours.