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U.S. Silica (NYSE:SLCA) is the largest domestic producer of silica sand, used primarily in oil production but also in other industries. SLCA has been on a recent tear from a trailing 90 day low of 21.71 all the way to a new 52 week high of 31.58 and it's just getting started.

Here is why:

A slew of recent upgrades from firms like Morgan Stanley and Cowen and Company both of which have set targets higher than the current price. Both based on a company growth and profitability stand point.

A massive shift to onshore oil production has created exceptionally higher demand of silica sand. SLCA being the primary provider is seeing a massive benefit. That demand is not expected to curb anytime soon as the U.S. is on track to be a net oil exporter by 2025 at the same time remaining one of the largest consumers of oil. This tidal wave also positions U.S. Silica as a perfect take-over candidate for big players in oil services, as well as Minerals, and industrial production. Mammoths like Koch industries could easily benefit from adding U.S. Silica to their portfolio.

Peer group companies like CARBO Ceramics (NYSE:CRR) and EOG Resources Inc (NYSE:EOG) are both trading at much higher P/E ratios. CRR coming in at 30.8 and EOG at 47.65, compared to these two SLCA should easily be right that camp with a much higher price-to-earnings ratio. Current Price-to-earnings on SLCA is hovering around 20 and forward P/E is an extremely low 10. This to me is one of the more promising indications of much higher prices ahead for SLCA.

A massive short position is still open and continues to be churned in SLCA. Reports that the stock has been shorted to almost 40% of the float are available online. A monster 14,140,400 shares are reported short out of a total of 35.5 million estimated in the float and only 52.3 million total shares outstanding. This is a level you would expect for a company that has already failed. Not for one that is in the thick of the most exponential growth market the U.S. has ever seen in domestic oil production.

Big money loves the stock. In addition to the recent upgrades and mentions of fast money CNBC you can see from reports on Google Finance that SLCA has 112% institutional ownership. Meaning big money and insiders own more than the total shares out there. Indicating that short traders have taken more positions than there are shares to cover those trades. This can only come to one conclusion and that is a massive short squeeze.

Taken in combination I would expect the stock to move north of $45 a share very quickly and expect to even see the $60's or $70's by the middle to end of next year. I calculate these levels based on a forward earnings per share of $3 and a expected price-to-earnings ratio of between 15, on the low end, and 28 on the high end. Which would be comparable to the peer group and . This all assumes no serious changes in underlying conditions.

The risk factor is the shorts were right and some how our government decides it's not in our best interests to expand domestic production. Based on the fundamental need for domestic production I'd peg the chances of that as extremely minimal. As long as oil shale is being cranked up in the United States so shall SLCA's revenue and profits.

Source: U.S. Silica: A Perfect Play For Aggressive Growth