To train buffs, Union Switch & Signal is a throwback to the heyday of railroads. But there's nothing old-fashioned about the Columbia (S.C.) company. US&S went public in 1993, after spending most of its 112 years as a part of larger companies. And business is just chugging along.
The company designs, builds, and sells systems and components that monitor railroads' cab, wayside, and yard operations--and has a 50% share of the market for such systems. Portfolio manager Walter Row of State Street Research Small Capitalization Growth Fund says the company's prospects are strong. Major railroads, accounting for 30% of sales, are investing big in productivity-enhancing devices.
But that's not all. Row says $1.5 billion in federal mass-transit aid will be spent in coming years on the sorts of systems US&S makes. That's a potential $750 million in sales for a company with estimated 1994 revenues of $180 million.
Row says the stock, which trades over the counter at 18, is cheap. Investors are paying 14 times earnings for a company growing at 25% a year.