LSB Industries, Inc.

LSB Industries, Inc. (LXU) is an even smaller cap company than SolarWinds (SWI), the software company from my previous post. LSB Industries (LXU) ranked seventh on Forbes list "Americas Best Small Companies". LSB sells chemicals used in fertilizer and mining. It also designs climate control products including: hydronic fan coils, water source heat pumps, geothermal products and packaged terminal air conditioners.

What really peaks my interest here is the geothermal heat pumps. Green building is more than just a trend or buzzword, companies are seeing that they can save real money over time by "going green". Climatemaster, a division of LSB Industries, has been seeking certifications that will help make its products Energy Star qualified. Achieving these types of certifications might be key to expanding the market for geothermal heat pumps (GHP).

I believe that LSB can lean on its profitable chemical business while it continues to position itself well for potential growth in the geothermal products market. The stock suffered a sell off after an issue at one of its chemical plants. A quick glance shows a P/E of about 13.5, which for a small-cap growth play is quite low. The company has $724M in sales, and that number should be growing.

The stock currently carries a $50 price target, and beat its last earnings estimates by 20%. I think this stock could be a sleeper with some good upside potential. I'm not sure that its a multi-year hold, but lets see where it is in 6 to 12 months.