With a long horizon though, the valuations and growth should lead to excellent gains in this Zacks #1 Rank (Strong Buy)>

Company Description

LSB Industries Inc is a manufacturing, marketing and engineering company specializing in commercial and residential climate control products. The company also offers chemical products for mining, agriculture and industrial markets.

Record-Setting Quarter

On Aug 8 LSB Industries reported a 40% increase in sales, to $236 million. While pricing had some impact, both the chemical and climate control business saw gains in volume as well.

Operating income was up more than 3 times, to $48.3 million. That let to net income of $28.6 million, 4.5 times the same period a year ago. Earnings broke down to $1.22 per share, 15 cents higher than the Zacks Consensus Estimate.

Upward Estimate Revisions

Thanks to the "best quarter in our recent history", according the CFO, analyst went ahead and raised forecasts for this year and 2012. The average EPS projection for 2011 is up 29 cents, to $3.67.

Estimates for 2012 are averaging $3.93, up 14 cents. Given the $1.33 per share earned in 2010, the expected growth rates are now 176% and 7%, respectively.

Valuations

Shares of LXU are going for just 9 times forward estimates, not a bad value. The PEG ratio is at 0.8 times and the P/S is just under 1.0.

The Chart

Yes, shares were beaten up, but look at the earnings trend. That gap between price and earnings will close and it should the price moving higher.

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