United States Lime & Minerals (NASDAQ:USLM)

[Sold as of Q3 2024 for a total gain of +222%. This thesis is a reconstruction of what I was thinking at the time.]

Date: Mar. 21, 2022

• Low PE despite stable and recently growing earnings/cashflows
• Impeccable balance sheet: no debt and growing cash pile, might result in one-time dividend in the future
• Runs entirely on its own cash
• Has a long business history (founded in 1948) with what appears to be few unhappy surprises
• Unusually low assets to liabilities ratio
• Surprisingly capital-light for an industrial company
• Extremely high margins for a commodity producer
• Successfully passing down price increases and growing revenue faster than volume
• Recent growth in demand is likely due to the Infrastructure Investment and Jobs Act
  • Highway construction mostly
• What could really derail or screw up this business?
  • Demand goes away for some reason (unlikely as heavy construction is likely planned years out)
  • Unexpected labour cost increases
  • Infrastructure act/funding is repealed in a big way
  • General economic cyclicality