Emerging Growth
12 years ago
United States Lime & Minerals (NASDAQ: USLM) stated that during the third quarter of 2012, demand for its lime and limestone products was lower primarily due to the reduction in steel output in the United States. Much of this lackluster demand is a direct result of a slow-paced ongoing lack of a sustained global economic recovery. Some of the problems in the company stems from the lack of clarity in China during 2012, but so far in 2013 the data in the Pacific Rim has been impressive. This past week, China released data on GDP, Industrial production and retail sales. All of the data points were better than estimates, as the country is growing at an impressive rate of 7.9%. All the folks calling for a China cliff have been wrong for sometime, as the country continues to grow at a very fast and acceptable pace. Most companies tied to the commodity sector will benefit due to Chinaโs ongoing growth, as demand for materials will stay high.
Many folks on Wall Street are calling for a solid year in equity securities, as companies are coming off a very low bar in 2012 and are expected to beat guidance for 2013. There are some indicators that match with this bullish theory, as the Dow Transports are at a 5-year high, the VIX index is at a multi-year low, and short interest on the NYSE is very low. At the moment, Euro zone debt woes and debt ceiling debate concerns are on hold, as investors look for undervalued growth stories in the market. With Chinaโs growth in-tact, many believe the indexes will continue to make new highs.
The company has a market cap of about $242mm and just over 300 employees. Headquarters in Dallas, Texas, is a manufacturer of lime and limestone products, supplying primarily the construction, steel, municipal sanitation, water treatment and oil and gas services. The company has only one real competitor that does limestone mining for the steel industry, which is Nittetsu Mining Company based in Japan. The company has a similar market cap of $376mm. In USLMโs last earnings report the company announced a gross profit of $7.8mm in Q3 of 2012, compared to $12.5mm in Q3 of 2011. This represents a decrease of $4.8mm, which is just over a 38% fall. Gross profit for the first nine months of 2012 was $25.3mm, a decrease of $7.0mm, or 21.7%, from $32.4mm in the first nine months 2011.
Here is the skinny. Earnings season has produced some winners and loser so far for Q4 of 2012, most notably GE and financials as golden, and Intel as one of the fallen gems. USLM expectations are fairly low for the 4th quarter. The stock chart shows that the shares have fallen from a recent high of $49.49 on January 2nd to a current $45.46. USLM is set to announce its next earnings report on January 30th, after the market closes. Buying the stock prior to the earnings report is a bit chancy but recommended for those investors that are more risk-takers. That said, the earnings report is expected to be on the poor side, as already indicated by the company and analysts, as Q4 demand was not good. Perhaps the more prudent play is to wait for a sell-off in the stock, which will create a nice buying opportunity. Either way, the stock is expected to do well in 2013 and will be a nice addition to the portfolio.
Get the full story and others here:
http://emerginggrowth.com/investing_today/united-states-lime-minerals-nasdaq-uslm-wait-for-the-sell-off-than/01/23/2013