Rail Infrastructure Stocks Get A Boost From Uncle Sam

The Obama administration recently announced just over $2 billion in grants and loan guarantees to help build and improve intercity passenger-rail service across the Northeast, Midwest and California. Fifteen states and Amtrak will receive $2.02 billion for 22 intercity passenger rail projects as part of a nationwide network. The largest share of the money will be used to upgrade train speeds from 135 mph to 160 mph on critical segments of the heavily traveled Northeast Corridor. Additional funds will go into improving sections of track and electrical line. The grant money was originally allocated to Florida, but newly elected officials there canceled a high-speed project linking Tampa to Orlando. The Federal Railroad Administration hopes to connect almost 80% of Americans to high-speed rail within 25 years. Vice President Joseph Biden said in a statement, "These projects will put thousands of Americans to work, save hundreds of thousands of hours for American travelers every year, and boost U.S. manufacturing by investing hundreds of millions of dollars in next-generation, American-made locomotives and rail cars.” While the rail sector has seen some big gains over the last year, the biggest profits could come from those companies that provide infrastructure products to the sector. Midcaps Telvent

and Cubic Corporation

are leaders in transportation fare collection systems and should see a boost as the recent stimulus focuses on passenger-rail.