Horsehead Holding Corp. (ZINC - Snapshot Report) has is firing on all cylinders and has analysts growing increasingly bullish.
This Zacks #1 Rank (Strong Buy) operates in a hot sector and the market is providing new comers a chance to get in at a nice entry point.
Horsehead Holding Corp. is the holding company for Horsehead Corp, which produces specialty zinc and zinc-based products. They also hold specialized industrial recycling companies and a zinc battery maker.
Easily Ahead of Expectations
On Feb 25 Horsehead reported fourth-quarter earnings of $6.9 million after stripping out a $7.7 million one time benefit. That comes out to EPS of $0.16, up from barely breaking even a year ago and 11 cents better than the Zacks Consensus Estimate.
Net sales jumped 40%, to $96.3 million on higher volume, prices and an acquisition. While the company is making its way through business interruptions from an incident at a factory, it plans on running near full capacity in the first quarter of 2011.
Horsehead's outlook was optimistic. The company said it has renewed its major contracts and shipments of zinc oxide should "increase significantly" this year. They may have lost some market share due to the refinery explosion last year, but expect that to be more than made up for by increasing demand.
Estimates Move Higher
Analysts raised expectations after the earnings release and now expect Horsehead to bring in $0.95 a share this year, which is up 12 cents over the past 3 months.
Next year's estimates are averaging $1.56, up 36 cents. Given the 39 cents earned in 2010, the annual growth rates are expected to be 143% and 65%, respectively.
As the economy continues to recovery, industrial companies have worked their way to some of the top rated sectors. Horsehead is the top rated of 18 companies in its industry, which ranks 37th out of 265 on Zacks.com.
Shares of ZINC surged on the earnings news and built upon those gains in the week after. But this recent market pause has led to some sharp profit taking. If you can stomach the risk, this could be a good chance to buy on the dip.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service