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Aggressive Growth

Universal Stainless & Alloy Products, Inc. (USAP - Snapshot Report) is making the most of the economic recovery. The backlog is at 2-year highs and the company is on a hot streak of earning surprises.

Analysts are bullish on this Zacks #1 Rank (Strong Buy) and

Company Description

Universal Stainless & Alloy Products makes specialty steels and alloys for the aerospace, power, petrochemical and heavy equipment industries.

Sales Almost Double

On Jan 26 USAP reported fourth-quarter results that included $51.6 million in sales, up from $26.7 million a year ago. Net income came in at $3.6 million, a vast improvement over the $1.0 million earned in the same period last year. The company's back log of $69 million is at a 2-yaer high.

Earnings per share was $0.52, a penny better than the Zacks Consensus Estimate and up from $0.14 a year ago. USAP is no stranger to earnings surprises as this was the fifth consecutive beat and they have only missed expectations once in the past 5 years.

Estimates Up

After USAP released the earnings news, analysts quickly raised full-year forecasts for 2011 and 2012. The consensus for this year is up 18 cents to $2.50, which is a 30% growth rate. Next year's projections are up 21 cents, to $2.90, a 16% growth rate.

Industry Comparisons

Steel producers are doing pretty well right now, with the industry coming in at 54 out of 264 industries. USAP is the fourth ranked of the 21 companies in the group.

The company operates with a net profit margin of 7.0%, well ahead of the 2.2% the peer group averages. Its return on equity is at 8.7%, compared to the industry norm of 5.6%.

The Recovery

As you would expect, it was a sharp decline for USAP and steel companies in general, during the recession. It is not the V-shape recovery people wanted but you can see the rebound in earnings expectations in the chart below. Each line represents a particular year's Zacks Consensus Estimate.

Right now the lines are rising year over year and through out the year, which is exactly what you want to see.

Universal Stainless & Alloy Products  - ticker USAP>


Bill Wilton is the Aggressive Growth Stock Strategist for He is also the Editor in charge of the market-beating Zacks Small Cap Trader service

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