I am always keeping an eye on what is happening on Capitol Hill. In 2002, the Farm Security and Rural Investment Act was passed to provide a boost to many different companies with interests in agriculture. This bill is due to expire this September, but analysts on the Hill predict that the renewed legislation will likely resemble the current farm bill.

This is good news for biofuel interests, fertilizer producers, and farm equipment providers (like Archer Daniels Midland Co. (NYSE: ADM)). The agriculture bill will also give a boost to manufacturers of rail car and rail equipment, whose products are needed to carry the agricultural products. For this reason, I think it might be a good time to pick up American Railcar Industries (NASDAQ: ARII).

American Railcar is easily considered one of the leading manufacturers of covered hopper and tank rail cars in the United States. The company also repairs and refurbishes rail cars and provides fleet management services for businesses using rail transportation. In addition to carrying grains and dry foods in its covered hopper rail cars, the tank rail cars transport the liquid products such as vegetable oil, corn syrup, and ethanol.

The 2007 Farm Bill is likely to bring big gains in particular to agriculture-based renewable fuels, like bioethanol -- which in turn will bring gains to the carriers of such commodities. Further, American Railcar is relatively undervalued versus its competitors. The P/E is 16 compared to the industry average of 27.3. In short, I like this company now -- and into the future.

Type of stock: A cyclical stock in the industrial materials sector, ARII makes and repairs rail cars.

Price target: I think that the upcoming farm legislation will likely help push this stock back to its 52-week high of
$41. Currently, ARII is hovering at $30.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.