U.S. Silica (SLCA) Reaches New 52-Week High At $43.40

Shares of U.S. Silica Holdings, Inc. (NYSE:SLCA) touched a fresh 52-week high of $43.40 yesterday, before retracing to close the day at $43.20. The Maryland-based producer of commercial silica has delivered an impressive year-to-date return of roughly 131%. Average volume of shares traded over the last three months is roughly 1,815.9K. U.S. Silica also has a long-term expected EPS growth of 11%.

What’s Driving SLCA?

U.S. Silica posted better-than-expected results in second-quarter 2016. Its adjusted loss was 17 cents per share for the quarter, lower than the Zacks Consensus Estimate of a loss of 23 cents. Revenues of $117 million also came ahead of the Zacks Consensus Estimate of $116 million.

U.S. Silica remains focused on cost reduction and operational efficiency improvement. It is executing many cost improvement projects throughout its supply chain.

The company is on track to deliver roughly $50 million of cost improvements in 2016. Moreover, the company remains focused on preserving capital, improving customer satisfaction and boosting its market position in 2016. U.S. Silica also looks to spend capital prudently in 2016, giving priority to critical maintenance projects.

U.S. Silica’s strong balance sheet also provides it with ample opportunities for making strategic investments that will help expand the life of its flagship operation and ensure its long-term competitive position in the market. The company’s decision to raise capital in first-quarter 2016 enhanced its financial flexibility and reinforced its balance sheet.

As part of its investment strategy, the company recently completed its acquisition of the NBR Sand unit of New Birmingham Inc., a privately-owned industrial minerals and logistics company. The acquisition allows the company to expand its product offering and capacity in the regional sands market, and enhance customer satisfaction. U.S. Silica is optimistic about the growth of the regional sand market and is looking to create a strong foothold in the same.

Moreover, U.S. Silica recently wrapped up the purchase of logistics solutions provider, Sandbox Enterprises LLC. Sandbox provides state-of-the-art logistics solutions and technology for the transportation of proppant used in hydraulic fracturing in the oil & gas industry. The acquisition, which provides U.S. Silica with unmatched logistics capabilities, allows the company to offer its customers significantly improved transportation and operating efficiencies and meaningful cost savings relative to existing proppant delivery systems. U.S. Silica expects the acquisition to deliver earnings accretion of between 20 cents and 30 cents per share in 2017.

U.S. Silica, in May 2016, also purchased a fully permitted, 327-acre parcel of land adjacent to its present silica sand mine and plant in Ottawa, IL. The company intends to use the property for future mining operations.

U.S. Silica has a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other well-placed companies in the basic materials space include Coeur Mining, Inc. (NYSE:CDE) , Nevsun Resources Ltd. (TO:NSU) and Klondex Mines Ltd. (NYSE:KLDX) , all carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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