Greenbrier Companies Inc. following commodities lower

Dec 8th, 2014 – Comment

At this time there are no patterns that indicate GBX is set to break higher.


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GBX LOGO

Keystone XL is momentarily scuppered, and Energy East effectively on hold.  The oil is moving by rail and I’m unsure who the best bet is, Greenbrier, American Railcar, or Westinghouse.

Thanks,

Dave

 

 

 

Hey Dave,

Thanks for the assignment. I’ll examine Greenbrier Companies Inc. (GBX NYSE) today, American Railcar Industries Inc. (ARII Nasdaq) on Wednesday, and Westinghouse Air Brake Technologies Corp (WAB NYSE) on Friday.

GBX is a leading supplier of transportation equipment and services to the railroad industry. They build new railroad freight cars at four manufacturing facilities in the U.S. and Mexico. They also produce marine barges at their U.S. manufacturing facility.  In addition the company sells reconditioned wheel sets and provides wheel services at nine locations throughout the United States. GBX owns approximately 8,500 railcars, and performs management services for approximately 238,000 railcars.  

What you need to understand is that this isn’t a pure play in the crude oil space. GBX doesn’t just manufacture, own or manage tank cars used in the transportation of crude oil it has a diversified portfolio.

A scout of the charts will start the process of investigating the three companies you are considering.

 

GBX

The three-year chart highlights the abrupt halt in an advance that started in October of 2012  when the shares were trading at $13.89. The stock ran to an all time high of $78.32 by September of 2014 but that was as good as it got. What we are faced with at this point is a stock that is dealing with a new downtrend, meeting resistance at $67.50 and testing support at $47.50. Worth noting is the pending formation of a bearish crossover.

 

 

 

 

 

 

GBX2

The six-month chart offers a close-up of the sell signals generated by the RSI and the MACD as we came into late September. The aggressive selling was followed by a bounce off of $47.50 by mid October with a run to resistance at $67.50. From there the momentum indicators generated sell signals that saw the shares retest support at $47.50. At this time there are no patterns that indicate GBX is set to break higher.

The weakness in commodity prices, including crude oil, has put the brakes on this and many other suppliers to the sector. I would advise caution until there is greater visibility with regards to direction.

Make it a profitable day and happy capitalism!

 

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