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I first profiled and bought frac sand provider U.S. Silica Holdings (SLCA) in June 2012. The company went public in February 2012 and shot up to $20 a share before quickly being cut in half. At the time I wrote that article, I picked up shares at $12 as they were rebounding. The stock doubled over the next nine months (I sold covered calls with a $20 strike price and the stock was assigned). SLCA reached a high of $28 a share in mid-March, but has since pulled back to $20 a share. Based on some recent positives, I believe it might be good time to get back into this cheap stock.

Here are several recent positives for SLCA:

  • Jefferies just upgraded the stock to Buy from Hold with a price target of $25 a share. The analyst firm noted: "We give more credit to the medium-term earnings potential of raw frac sand, given the strength of SLCA's apparently best-in-class distribution network."
  • The company just initiated a 12.5-cent-a-share quarterly dividend.
  • Consensus earnings estimates for both FY 2013 and FY 2014 have ticked up over the last three months.
  • EPS came in a bit light during the company's earnings report this week, but revenue was just above consensus estimates.

U.S. Silica Holdings produces and sells various commercial silica and industrial mineral products. The company offers whole grain commercial silica products to be used as fracturing sand in connection with oil and natural gas recovery.

Here are four reasons why SLCA has upside from just over $20 a share:

  1. Analysts expect over 80% revenue growth in FY 2013 and more than 20% sales increases in FY 2014. The stock sports a minuscule five-year projected PEG (.30).
  2. Given projected growth, SLCA is cheap at just over nine times 2014's projected earnings.
  3. Operating cash flow has almost tripled over the past two completed fiscal years. With the new dividend policy announcement, the shares will yield just under 2.5%.
  4. The mean price target by the eight analysts who cover the company is just under $26 a share.
Source: U.S. Silica Holdings: Frac Sand Demand Could Power Upside