Is Your Portfolio Optimized for the Future?

Let’s talk about Westinghouse Air Brake Technologies (NYSE:WAB), a leading supplier of value-added, technology-based products and services for rail, transit and other global industries.

Founded in 1869 by George Westinghouse, the company has been a major player in the rail industry ever since. Last week, the company posted earnings (with revenue coming in at $731 million, up almost 15%, that was a record) and raised its guidance. It also established new records for earnings and margins - and you know I always talk about margins, I love when they expand.

Gross and operating margins by the way, in my mind, still have room to the upside. As demand starts to increase, not just in America, but around the world, the company sees equal opportunities in freight and transit rail. Also, it just completed the acquisition of a company called Fandstan -- an electric company that produces pantographs, which are used in rail, tram and the energy industry -- that’s a big one for them. I also think the industry will eventually see new regulations for brakes.

In the meantime, management raised guidance for the full fiscal year, and I think they are still being conservative. These rails are conservative by nature, the stock is up, but I still think at the very least it can go to $100 -- maybe higher.

Now let’s talk about InvenSense (NYSE:INVN).

InvenSense makes a sensor system on a chip -- it’s called the motion tracker – it is used in gyroscopes to help all of your electronic devices. So when you rotate that cell phone, it keeps it all oriented. It’s not just smartphones, the chip is also used in tablets, wearables, gaming devices, optical image stabilization, bluetooth headsets and cellphone remotes. Management just came out and said they’re going to do a major ramp up and inventory build. Want to know the reason they are doing it? They think that demand is going to be huge, and they also feel very confident about taking market share. I love companies that take market share. Now the stock breaks out at $27, from there I'm looking for it to rally to $30, from there I see some resistance, but I think ultimately it’s got even more upside potential.

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