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The Microcap Speculator submits: Smith-Midland Corporation (OTCQB:SMID) is a small manufacturer of pre-cast concrete products, such as safety barriers, prefab building walls, agricultural barriers, utility vaults and pads, etc. Admittedly, this story has zero sex appeal, but it does have a reasonable valuation, improving fundamentals, over forty years in the business, and I am told, a good reputation. In addition to manufacturing pre-cast concrete products in Virginia and North Carolina, Smith-Midland also generates royalty revenue by licensing its designs to 36 licensees in North America, Europe, South America, and Australia.

Last year, Smith-Midland earned $1.35M ($.29/share diluted) versus $.49M ($.11/share diluted) in 2004, an increase of over 100%. The increase was largely a function of margin improvement, although revenues did grow 7.6% to $23.90M from $22.12M in 2004. In comparison, Smith-Midland has a market cap. of $13.86M and an enterprise value of $17.10M.

The company looks poised to do even better this year. Backlog as of March 24, 2006 stood at a record $13.8M, over twice the $6.4M it was just one year ago. That backlog figure, taken from the recent earnings report, includes only orders under contract. The company also says it has 7 projects under letters of intent which amount to an additional $6.4M.

Technically, the stock seems to be meandering. I don't know what will be the catalyst for the next breakout or (hopefully not) breakdown. However, at under 1x sales and 10x earnings, with strong earnings growth and only a small amount of debt on the balance sheet, I'm willing to dip my toe in the shallow end of a Smith-Midland pre-cast concrete pool (I don't think they actually make these but I liked the metaphor). I bought a small position last week at $2.91.

DISCLOSURE: I am long SMID.OB. Not a recommendation to buy or sell any security. For informational and educational purposes only.

SMID 1-Yr Price Performance:

Aside: Did you know that Seeking Alpha now publishes a one-page recap of Jim Cramer's Mad Money TV show, Lightning Round, Radio program and Stop Trading?

Source: No Sex-Appeal, No Matter; Bullish on Small-Cap Smith-Midland (SMID)