The deep plunge in oil prices has been the key market theme over the past couple of months. The almost $50 a barrel share decline in oil prices has created many winners and losers in the markets. Transports like Airlines have soared while the collapse in crude has decimated much of the exploration and production and energy services companies.
The fall in energy prices has also spread to other areas of the market such as engineering and construction firms and even aerospace manufacturers like Boeing (NYSE: BA). Some stocks have quite frankly been unfairly punished as investors have bailed on anything connected with the oil and gas industry. One sector of the market that has been hit by a shortsighted overreaction is railcar manufacturers with all names in this space being taken out to the woodshed and beaten like a rented mule. This is creating some great buying opportunities in the area, none more so than Greenbrier Companies (NYSE: GBX) which manufacturers, leases and repairs a variety of different types of railcars, a new addition to the Turnaround Stock Report portfolio.
The stock of Greenbrier fell more than $30 a share or some 40% during the fall on irrational fears that the fall in oil prices will significantly impact its business fundamentals. It's since retraced some of that. This is a huge buying opportunity as if anything Greenbrier's business drivers have actually improved over the past ninety days.
The market is obsessed that the recent fall in oil prices will completely curtail demand for new oil tank cars. Although exploration and production companies are cutting capital expenditures, there is little doubt than domestic oil production will continue to grow in 2015 albeit at a slower rate than in previous years.
The amount of oil transported via rail will also continue to grow. Credit is likely to dry up for huge capital projects like pipelines costing hundreds of millions or even billions of dollars to build. These projects also face increasing environmental opposition which has prevented the approval of the Keystone pipeline for six years. Just recently the President again signaled that he would not sign legislation approving the pipeline.
