Westinghouse Air Brake Technologies, or Wabtec (ticker: WAB), the Stock to Study selected by BetterInvesting Magazine’s Editorial Advisory and Securities Review Committee, highlights one of the main issues U.S. growth investors face in the coming years.
With many economic forecasts calling for mild growth domestically for the next several years, investors seeking growth equities should concentrate on companies expanding internationally, members of committee said. Wabtec is one such example. Though North American business is critical to Wabtec’s revenues, the company will be fueled by overseas opportunities in the coming years.
“Outside of North America,” the company says in its most recent annual report, “many of the rail systems have historically been focused on passenger transit, rather than freight. In recent years, however, railroads in countries such as Australia, Brazil, India and China have been investing capital to expand and improve both their freight and passenger rail systems. Throughout the world, some government-owned railroads are being sold to private owners, who often look to improve the efficiency of the rail system by investing in new equipment and new technologies.”
So even though we might not think of the rail business as a growth area in the way that we do various IT and health care industries, in emerging markets and elsewhere, the rail infrastructure is far from mature. Finding well-managed companies poised to take advantage of these opportunities whose stocks are reasonably priced are key to successful growth investing.