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Here's Why You Should Add Hi-Crush (HCLP) to Your Portfolio

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We are positive on Hi-Crush Partners LP’s (HCLP - Free Report) prospects and believe that the time is right for you to buy the stock as it looks promising and is poised to continue the momentum.

Let’s delve deeper into the factors that make this company an attractive investment option.

What Makes HCLP an Attractive Pick

Solid Rank & VGM Score: Hi-Crush currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.

An Outperformer: Hi-Crush has outperformed the industry it belongs to over the past six months. The company’s shares have gained 28.7% compared with roughly 17.6% growth recorded by the industry.

 



Attractive Valuation: Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value mining stocks, Hi-Crush is currently trading at trailing 12-month EV/EBITDA multiple of 6.9, much cheaper compared with the industry average of 29.5.

Estimates Moving North: The Zacks Consensus Estimate for earnings for Hi-Crush have been going up over the past month. Over this period, earnings estimates for the current quarter have moved up 1.3% to 78 cents per share while the same for full-year 2018 rose 3.2% to $2.93.

Superior Return on Equity (ROE): Hi-Crush’s ROE of 18.8% compared with the industry average of 3.2%, reflects the company’s efficiency in utilizing shareholder’s funds.  

Solid Q1 and Upbeat Prospects: Hi-Crush swung to a profit of $53.9 million or 59 cents per share in first-quarter 2018 from a net loss of $6.8 million or 7 cents recorded a year ago. Earnings beat the Zacks Consensus Estimate of 58 cents.

According to Hi-Crush, total sales volumes for second-quarter 2018 is expected to increase to the range of 2.9-3.1 million tons. Per the partnership, the expected sequential increase in volumes sold reflects continued temporary impacts from ongoing issues related to the Class-1 railroad service. It expects rail service to gradually improve through the remainder of second-quarter 2018.

Hi-Crush also noted that pricing continued to improve in the second quarter and is expected to increase over the coming months on the back of tightness in frac sand demand and supply, mainly for fine mesh sand. As such, it expects contribution margin to improve during second-quarter 2018.

Other Stocks to Consider

Some other top-ranked stocks worth considering in the basic materials space are FMC Corporation (FMC - Free Report) , Westlake Chemical Corporation (WLK - Free Report) and Celanese Corporation (CE - Free Report) , each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

FMC Corp has an expected long-term earnings growth rate of 14.3%. Its shares have moved up 16.1% in a year.

Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have rallied 88.3% in a year.

Celanese has an expected long-term earnings growth rate of 8.9%. Its shares have gained 30.6% in a year.

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