Stifel: Buy 'Cal Ripken-Like' Wabtec

Shares of Westinghouse Air Brake Technologies Corp WAB are rising in Monday's trading session after Stifel upgraded its rating of Westinghouse, commonly known as Wabtec, overnight from Hold to Buy.

The move was made after the firm noted that the company's pullback presents a rare opportunity to buy such a high quality name on weakness.

Stifel now expects shares of Wabtec to break their "Cal Ripken-like annual streak" for increasing in value. Wabtec had been able to achieve this each year from 2000-2014 and was the only company on a U.S. exchange to do so during the period.

The firm views Wabtec as a diversified and high-quality way to invest in rail globally. However, there are still risks.

"We believe the Street's perception of the company has gone from "the company that can do no wrong" to a company that is going to struggle with declines in locomotive and railcar production volume," Stifel noted.

Stifel also notes an attractive valuation:

"With the company's forward P/E at the lowest level since mid-2013, we expect the multiple could appreciate once it becomes clear that earnings should hold up well in 2016 (the company is expected to discuss its 2016 outlook in February), which may get shares off to a strong start early next year and provide the opportunity to start a new streak of annual share price increases. We are upgrading the shares from Hold to Buy and establishing a 12-month TP of $88 (18.0x our 2017 EPS estimate of $4.90)."

Wabtec's stock is down 21 percent YTD (-3 percent for the S&P 500) and its 2-year forward P/E multiple has declined from a peak of 22x in May to 15.4x currently (19x, on average, from 2013-2015).