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Are railroad companies worth a buy after plunging earnings? Buy RAIL and write June strie 20 at 1.15/contract as a hedge.

With Burlington off 33% over the past year, Union Pacific down 29%, Norfolk falling 36%, and CSX off 49%, many portfolio managers are begining to consider a stake in these compnaies.  ... fund manager Thomas Steyer of Farallon Capital Management has been buying RAIL which is down 50% over the past year. As of his Mar. 30 regulatory filing, he owned more than 6% of the company's shares.  The company is trading at 19, has almost $11 a share in cash and virtually no debt. Its results improved in 2008's fourth quarter after tanking earlier in the year. It reports first-quarter results on May 5.

 In addition to coal cars, RAIL designs and builds flat cars, mill gondola cars, intermodal cars, coil steel cars, and motor vehicle carriers. FreightCar America Inc. has a market cap of $174 million; its shares were traded at around $18.16 with a P/E ratio of 11.7 and P/S ratio of 0.3. The dividend yield of FreightCar America Inc. stocks is 1.4%.