Barron's: Oil tank-car makers could be poised to tumble


Oil tank-car makers such as Trinity Industries (TRN), American Railcar (ARII) and Greenbrier (GBX) may have overestimated demand, and their shares could be vulnerable to a 20%-plus drop, according to a weekend Barron's report.

Oil finds in places such as North Dakota have strained pipeline transport, creating the need for more trains, but by 2016 that need will be more than met, analysts say.

GATX (GMT) CEO Brian Kenney, whose leasing company owns the second-largest tank car fleet in North America, says there's eventually going to be an oversupply as the cars are delivered and as pipelines come online.

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Comments (3)
  • sherm8or
    , contributor
    Comments (8) | Send Message
     
    Given proposed regulations to increase structural integrity/design changes that will impact a large fleet of railcars, the added demand for maintenance modifications combined with a robust replacement cycle for new cars should bode well for years. Furthermore, this market is not limited to just CONUS. Global demand for railcars is increasing.
    18 Nov 2013, 10:14 AM Reply Like
  • Chancer
    , contributor
    Comments (4046) | Send Message
     
    Oil exploration and production is not static, but it is dynamic. When the current demand for railcars declines in a couple of years, there will be new areas of development with new demand.
    18 Nov 2013, 03:34 PM Reply Like
  • motertek32
    , contributor
    Comments (5) | Send Message
     
    CEO Brian Kenney of GATX ,says there's eventually going to be an oversupply. Keep vigilant for "eventually".
    18 Nov 2013, 05:41 PM Reply Like
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