Investment Review №357. A Change of Leadership

United States Lime & Minerals (USLM) is a U.S. producer of lime and limestone serving construction and industrial markets. The investment case rests on high profitability, owned raw-material reserves, and a debt-free balance sheet. The primary catalyst is a new kiln in Texas, which should expand capacity and earnings in 2027. Further upside could come from infrastructure projects and data-center buildouts. A cash reserve enables the company to grow without leverage. Near term, quarterly margins have compressed on higher fuel and freight costs and start-up expenses. Key risks include a slowdown in construction demand, delays in commissioning new capacity, and elevated costs.

12-month price target: $131.

LSB Industries (LXU) produces nitrogen fertilizers and chemicals used in agriculture, manufacturing, and explosives. The thesis is supported by resilient mining demand, operational reliability, and long-term contracts, with a mix shift toward higher-demand ammonium nitrate as a key driver. Additional upside could come from a CO2 capture project that, if approved, would generate tax-credit revenue. Strong cash flow is funding growth. That said, part of the latest quarterly cost savings is one-time, and weaker nitrogen prices could pressure margins. Key risks include higher natural gas prices, production outages, permits, and refinancing costs.

12-month price target: $10.60.

Asure Software (ASUR) provides cloud-based payroll and HR solutions to SMBs. A high recurring-revenue mix, accelerating organic growth, and rising profitability underpin the investment case. The primary driver is upselling additional products to the installed base, complemented by HR/tax process automation, new customer additions, and M&A. Revenue per customer is growing faster than costs, though elevated sales spend and acquisition integration costs will pressure margins near term. Key risks include competition, SMB weakness, data security, and leverage.

12-month price target: $13.

CVR Partners (UAN) is a U.S.-based producer of ammonia and liquid nitrogen fertilizers for agriculture. The investment thesis centers on proximity to key U.S. farm regions, a competitive feedstock mix, and returns to investors. Key drivers are high plant utilization and supportive selling prices. Pet coke feedstock at one facility lowers exposure to natural-gas price volatility. Distributions are cash-flow based and can vary quarter to quarter. A normalization of fertilizer prices would pressure profitability. Principal risks include farming-cycle volatility, maintenance, concentration in two plants, and leverage.

12-month price target: $124.