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Mineral Technologies (NYSE:MTX) has a market cap of $765 million as a producer of specialty mineral products used in the products such as paper, building materials, paint, glass, food, and pharmaceutical industries. Its main product lines are: world leading provider of PCC to paper industry; one of world’s leading developers of refractory materials for coating surfaces to resist extreme heat; and mining and producing calcium carbonate and talc which have a variety of industrial applications.

Shares trade 14.6X forward earnings, 0.73X sales, 6.25X free cash flow, and the balance sheet is almost free of debt, while having nearly $11 per share in cash on the books. The company is priced cheaper by most metrics when compared to other synthetic material companies, and also is growing earnings faster than its peers, and 46% of sales come from outside the US.

At an EV/EBITDA of 4.18 and EV/Revenue of 0.62 the company is valued at half that of building materials producer Martin Marietta (NYSE:MLM). Demand for the company’s products hit a low in Q1 and now the company is on the upswing.

As many of MTX’s products are used in housing and other consumer driven industries, recent housing data and consumer confidence data reflect that the company will be well positioned for a turnaround, while also being able to withstand the rougher times due to the excellent financial situation.

Mineral Technologies has a small float of just 18.33 million shares and institutions own 98.6% of the company, while insiders only own 0.43%, something that makes for a less bullish case for shares. Prudential owns 14.57% of the company and FMR owns 12.72% of the firm.

The technicals are very bullish on MTX as shares broke out of a downward channel trend recently, consolidated, and now have broken out on an approach to the 200 day EMA near $43.

MTX is a solid breakout play with improving earnings visibility, and has the type of balance sheet that can let any investor sleep at night.

Disclosure: Currently no holdings in MTX, but considering a stake

Source: Mineral Technologies: Undervalued Mid Cap for a Consumer Recovery