Yesterday the Commerce Department reported that the US economy shrank one percent in 2014’s first quarter, surprisingly worse than its initial estimate in late April of .1 percent growth. Most people blame the brutal “polar vortex” winter weather for this decline. All morning, the talking heads on CNBC have been excitedly predicting that, with the weather improving, second quarter growth will rebound to two or even possibly three to four percent. The recovery, they say, is accelerating. To which I would reply: you call this a recovery?
When I seek new investments for my $100 million fund, I often research companies that benefit from secular changes, large shifts in society and business. Three epic secular shifts happening right now are: the rapid adoption of cloud computing platforms, the tidal wave of growth in Texas (almost a million people a year are moving to that state), and America’s booming energy renaissance. The last change is particularly breathtaking. We’re pulling up almost nine million barrels of oil a day now in this country. That’s almost double the amount we extracted ten years ago. Natural gas production is way up as well, causing some analysts to predict America will be a net exporter of fossil fuels sometime in the next decade.
This growth in domestic oil and gas production is obviously good for energy companies. But how those fossil fuels get from the ground to the gas pump will strongly benefit one, very old-school mode of transportation: railroads. That’s why one of my favorite stocks these days is Trinity Industries’ (TRN). Its products were last considered “high tech” in the 19th century. But they’re going to make the company a ton of money here in the 21st.