Many utilities across this country are in precarious shape when it comes to their inventories of coal. Coal miners are doing all they can to increase coal production and shipment. Railroads are enjoying banner days in part because of coal and would like to haul even more. Recently IPO'd railcar maker FreightCar America (NASDAQ:RAIL) makes coal-carrying railcars. Follow my train of thought?

Results for the company's second quarter were excellent. Sales more than doubled to in excess of $230 million, and the company reversed a year-ago net loss with earnings of more than $9 million. With $0.76 per share in GAAP earnings and $0.90 per share in pro-forma earnings, FreightCar handily smacked the mean analyst estimate.

For the quarter, the company saw orders rise 60% to more than 5,100 cars, and the backlog nearly doubled from the year-ago level. Management succeeded in passing higher raw material costs on to customers and believes it maintained its industry-leading market share in coal cars. Although FreightCar has seen some constraints from a shortage of wheels, they are working on finding additional sources of supply.

One of the distinguishing aspects of FreightCar is that it makes aluminum coal-carrying cars. Aluminum is obviously lighter than steel, so a train of aluminum cars can carry more revenue-producing cargo. The impact of using aluminum cars varies with geography and cargo types, but I've seen estimates that range from the high single digits to the mid-teens in terms of the incremental cargo that aluminum cars permit a train to haul.

Railroads are cyclical businesses, and that means that a capital-equipment provider like FreightCar is also in a cyclical business. After several years of underspending on new cars, railroads are now aggressively trying to swap out old cars, as well as supplementing its fleet with additional new cars. Whether it's traditional railroad customers such as Union Pacific (NYSE:UNP), CanadianPacific (NYSE:CP), or Burlington Northern SantaFe (NYSE:BNI) -- or equipment leasers such as General Electric (NYSE:GE) -- it seems that almost everyone wants more coal cars.

As a cyclical company, this won't last forever. While managers from across the railroad sector think that this cycle will be smoother, and there won't be a big drop in car orders for the next few years, we won't know until we know.

Even if overall car demand slows, though, FreightCar should still have further opportunities. FreightCar today is pretty much just a domestic manufacturer of aluminum coal-carrying cars. Not only is there potential for overseas expansion, but FreightCar could also attempt to grow its share in non-coal-carrying cars. Assuming it takes this track, it could see many more years of above-market growth.

Living in between the coal producers, such as Arch Coal (NYSE:ACI), and the railroad operators, FreightCar will very likely trade in the short term in conjunction with investor sentiment on coal demand and rail shipment demand. Cyclical companies can be tricky to own over long periods of time. But, based on this quarter, it looks like FreightCar might yet have a bit more room to run.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).