Trinity (TRN): Value play in wind power

"The power-generating potential of wind is enormous; the wind resources in North Dakota alone are enough to power a staggering one-third of the country's total power needs.

"It comes as no surprise to hear that $36 billion will be spent on wind generating equipment this year. I see Trinity as a great way to participate.

"Trinity is a top supplier of several different industrial product lines, including railroad cars, highway girders, inland cargo barges, and propane tanks -- all of which happen to be doing pretty well at the moment.

"However, the firm has a large and growing stake in wind towers. The company is among a handful of recognized leaders in the market for these giant tubes.

"This facet of the firm's business is growing rapidly amid heated demand. Wind tower revenues have spiked 35-fold over the past four years, soaring from just $11 million in 2004 to an expected $390 million this year.

"Better still, order backlog over the past 12 months has surged from $200 million to $1.6 billion -- representing a highly visible stream of future business. Within the next five years, management is forecasting that wind tower revenues could double again to $800 million.

"Even without energy equipment, the firm's other business segments alone merit a closer look. Trinity is the nation's largest rail car manufacturer, with its cost-efficient Mexican plants rolling out 40 new cars per day. Further, about 1 in every 4 U.S. bridges is in need of repair -- and Trinity is the nation's only supplier of bridge guardrails.

"The firm's fleet of 41,000 railroad cars available for lease is 99.6% utilized, and the average lease has over five years remaining.

"These revenues are locked in and will provide some stability regardless of what happen on the product sales side. But future orders should remain robust, considering 700,000 of the nation's 1.6 million railcars are more than 25 years old and the replacement cycle has already begun.

"With a balanced mix of old and new, Trinity reported second quarter earnings that shattered expectations and raised its full-year earnings outlook. Sales and profits in the firm's wind tower unit shot up 58% and 117%, respectively. With all this in mind, I will add TRN to my 'Deep Discount' Portfolio."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.