Through the first two months of trading, SLCA's PPS grew by over 30%, up to $22.14 per share. However, from April on, these strong gains were eliminated. As the S&P fell by 6.4% since the start of April, SLCA has seen their price drop down to $11.75 per share. Due to the poor timing of the IPO, SLCA has now become an extremely undervalued stock. According to MarketWatch, 4/4 analysts have placed a buy rating on the stock, and have set an average price target of $26.25 per share. While expecting a company's stock price to increase by well over 100% is a lofty goal, studying the economic environment which this security entered as well as their market presence and financial performance, yields a belief and trust that these projections are entirely plausible.

Sales growth in 2010 rose by nearly 28% from 2009 levels, and in 2011, sales continued to grow by 20.67% from 2010. While sales growth has been increasing, growth in expenses has been decreasing. In 2010, expense growth was at 81.71% from the prior year, but in 2011, this growth slowed to only 50.48% growth from the previous year. Given the fact that sales growth is rising while expense growth is decreasing, this one fact immediately provides SLCU with a positive financial situation.

In addition to sales and expense growth, net income also has extremely positive indications. In 2010, net income grew from 5.54M to 11.39M, a growth of 105.67%. In 2011, net income rose from 11.39M to 30.25M, which gives them a growth of 165.56%. Additionally, EPS are up from 0.22 in 2010 to 0.61 in 2011, a 183.45% growth. Although this massive amount of exponential growth may not be completely sustainable, it can be expected that a company with over 100 year history will continue its market dominance going forward. This is not a new and speculative company, and is instead a heavily established and successful business. I feel that they had the unfortunate timing of entering the market just as the economy's gains slowed, and because of that, their stock price has suffered.

Given their market presence, financial growth, long standing history of business operations, and un-timely entrance into the equity market, I find it implausible to believe that this company has anywhere to go but up. I expect to see strong gains from U.S. Silica in the next one to two quarters, and am excited to see what happens which this stock moving forward.

Disclosure: I am long [[SLCA]].

ARCO is a franchising company for McDonald's restaurants in Latin America. They currently operate over 1,840 restaurants in over 20 countries, are the largest McDonald's franchisee in the world, and is one of Latin America's ten largest employers. Given the massive scale of the business operations of the company, there seems to be a great potential for growth in the developing economies of Latin America. In the United States alone, there are over 13,000 McDonald's. Given the fact that the United States has an approximate population of 313 million people, and Latin America has a total population of approximately 570 million, it seems to be obvious that McDonald's still has a strong potential to grow in the region given that there are almost 11,000 more Mcdonalds restaurants in the United States than in all of Latin America.

Understanding that there is the potential for long term growth is the first criteria that must be satisfied when considering a potential investment. Second, management and evidence for capturing the potential growth is vital to successful investment choices. Arcos Dorados is one company that warrants such investigation.

Historically, McDonald's has been a secure stock. With stable growth, consistent dividend payment, and a dominance over their competitors, they have been a very strong pick over the past decade. ARCO is a new piece to the McDonald's puzzle, and although it is a separate entity, it is highly correlated with the success of McDonald's. Given the fact that this company is a relatively newly publicly traded company, and that the stock has dropped to 13.40 a share compared to their average price of around 20.5 dollars per share over the past year, there is a significant opportunity for capturing some profits from this unexpected decrease in price.

Up until this past quarter, since their IPO, ARCO has consistently performed in line with McDonald's. This past year, as economic performance increased, McDonald's was able to provide a higher level of investment in their growing markets such as Latin America. As the economy became more skeptical about future performances, mainly starting in March, with the heaviest drops seen throughout May, levels of outflows of capital away from the domestic US market decreased. With this, ARCO has seen their ability to grow slow, and this has been reflected by a drop in their stock price of approximately 30% in the past three months.

When it comes to good investment opportunities, the best time to buy are when good companies are down. It appears that with ARCO, this could be one of these times. ARCO is a major player in the global expansion of McDonald's, and it can be expected that their role will continue to grow.

Since 2007, Arcos has seen net income rise from 6.23M to 115M. Their EPS has increased by 33.33% from 2009 to 2010, and by 22.73% from 2010 to 2011. With an average target price of 18.21 according to MarketWatch, this price would provide investors with a return of 35.9%.

Given this elementary overview of the company's environment and operations, it seems clear to me that ARCO presents a strong opportunity to buy, and their performance should be monitored over the next quarter very closely. The potential ROI for ARCO appears to be extremely attractive, and if I am going to invest in a company that I have little first hand interaction with, it might as well be one that is heavily associated with one of the most successful restaurant companies in history.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Some are active, and some are passive, but the fundamental framework for successful trading starts on research. Whether holding positions for long term expected growth, or buying and selling off based on technical analysis and historical performance, backing your decisions with educated research separates blind betting from informed investing.

In my personal portfolio, I like to divide funds into two different categories. One being long term positions that I buy and hold for a minimum of 8 months. These positions are placed after due diligence has been performed on certain companies and sectors. After isolating a sector that has the potential for growth over the next 1-5 years, companies with high growth potential can be investigated. For example, historically, as incomes rise, and economies develop, there is a higher demand for a higher quality of meat. The most basic meat being chicken, has been a staple for street vendors in China. However, given that the economy is strengthening, and more individuals are finding greater wealth, it can be reasonably expected that there will be a rise in demand for higher quality meats such as beef. Provided that this industry outlook is true, researching the companies that have to gain from this can be a good play. Taking this idea one step further, there are not currently many beef producers in China, but there are distributors. Herein lies two directions to investigate. The distributors, or producers? Major beef imports to China come from primarily New Zealand or Australia. Given this knowledge, the companies that benefit from an increase in demand for beef in China, presumably lie in these countries. Companies such as JBSAY, or Market Vectors Agribusiness (MOO), may be potential gainers if this expectation holds true.
If we look at it from a domestic point of view, the meat packaging companies may gain from this newly found demand. Companies such as Zhongpin (HOGS), Hormel Foods (HRL), or Smithfield Foods (SFD), stand to gain in these regards.

Long term projections based on diligent, and thought out processes of the business environment keep investors ahead of the curve. Once the dominoes start falling, it is easy to see which ones have already been knocked over, where investors gain, is knowing which one will be hit next.

Disclosure: I am long [[HOGS]].