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Analysis of companies, securities and valuations.
  • Taking profits on FreightCar America (RAIL) 0 comments
    Apr 12, 2010 12:29 PM | about stocks: RAIL

    I've been long the stock from around 20 as disclosed in my initial post from January 24, 2010 (full article here). My calculation of intrinsic value over the course of the cycle was approximately 30, using inputs for unit volumes and margins that I felt were reasonable and provided some margin of safety. At 20 there was a 50% margin of safety, but I think that gap has now been narrowed to the point of exit for the value investor. At current prices, the margin of safety is only 10%-15% by my analysis. Even if you are more bullish on future order volumes, I think the air is getting pretty thin up here.

    Per my most recent update (see here), I recommended an exit in the 27-28 range, and I personally place a sell limit at 27 (I think my shares were literally the first traded today as the stock opened at 27 and quickly traded up to 28 after an hour).

    The company's end-markets seemed to have turned the corner, and the stock has been on a tear lately. There should be many quarters of positive earnings momentum ahead and extremely easy comparisons to past periods, but for a value investor I think the easy money has already been had.  

    Disclosure: No position - author was long RAIL and has now sold

    Stocks: RAIL
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