Mitcham Industries (
Much of the world's surface has been mapped. You can even
capture an image of someone's house via satellite on the other side
of the world. What we don't know much about is what lies
beneath the soil, socks and water. Below the earth's surface
is a plethora of resources that have yet to be
Mitcham leases and sells all types of geophysical equipment that
are used to perform seismic and other studies for all sorts of
industries around the globe.
Their products are an essential piece of the puzzles as we work
to make the world a safer, more efficient place with sufficient
energy to power our growing population.
Company Description & Developments
Mitcham's products are an essential part of our energy solutions.
A project like Keystone XL would be impossible to
complete. Just about every major exploration or construction
project needs research and studies before getting approved.
In the Keystone XL project alone there were hundreds of pages of
ecological, sizemeic, soil, water studies that were
performed. Many of these studies utilized products sold be
We are becoming more cognizant of the effects that our
population has on our earth and because of that laws are in place
in most countries, states and municipalities to make sure the
project is not only financially viable, but ecologically sensible
The US alone is extremely deficient in the quality of our
infrastructure. Roads, bridges, electrical grids, dams are
all aging and will eventually need repair or replacement.
As populations grow and economies improve from here, there
should be more demand for projects that utilize Mitcham's
In the short term, demand for Mitcham should be mostly
driven by improving consumer health and sentiment and MIND's cheap
Mitcham is a small-cap company (300 million) that is trading at
about 17 times trailing earnings (P/E). Looking forward,
Zacks Consensus Estimates sees Mitcham's Communication's P/E
dropping to 13.5, with no change in price from these levels.
Mitcham became a Zacks Rank 1 stock on Friday.
Last quarter MIND reported sales growth of 40% year over year
and 31% over the previous quarter with total sales of 71 million in
Expectations are for Mitcham to make 69 cents per share this
quarter when they report on April 10th. Of the 3 analysts
that cover the company, the consensus is for the company to grow
earnings by 417% in FY2012 and 33% in FY2013. Remember that
percentages can look extreme when you jump from a small dollar
amount like .54 to 2.34.
Mitcham surprised analysts to the upside by 100% last quarter,
with the average earnings surprise being a positive 44%.
Small cap growth companies like this have a higher chance of
surprises both up and down, due to the instability of their
business and lack of deep analyst coverage.
Market Performance & Technicals
The stock has made some extreme moves over the past several
months! Since hitting a low of $9.52 in October, MIND has
risen almost 158%. This extreme movement is something to note
and to perhaps be cautious of. Small cap, lighter volume
stocks such as MIND carry additional risk. This is not
something you want to own if you are not a risk taker.
Like many of the stocks we have been following over the past
several weeks, it might be best to wait for the pullback before
Mitcham remains in a bullish channel, but we are seeing some
consolidation between $21.50 and $25. Another plus for the
bulls is that MIND is firmly above its 50 and 200 day moving
averages of $19.23 and $16.15 respectively.
Mitcham has outpaced the S&P 500 by 112% over the past year
and almost 6% over the past month. It is up 60% more than the
S&P over the past 3 months alone!
Again, there is certainly momentum here, but use caution
and less exposure if you decide to trade MIND.
Jared A Levy is the Momentum Stock Strategist for Zacks.com. He
is also the Editor in charge of the market-beating
Zacks Whisper Trader Service.
MITCHAM INDS (
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