Smart Sand (NSDQ: SND) is a producer of Northern White Sand used as a proppant for hydraulic fracturing (i.e., it helps hold the fractures open). The company went public in an IPO last November and was added to the portfolio last month.

I added the company after a sell-off had dropped the price by nearly 20% in a week. But that sell-off wasn’t done. Oil prices would fall back below $50/bbl within a couple of weeks after I made the recommendation, and Smart Sand would shed another 20%. The fundamentals hadn’t changed, but the company traded down with oil prices. I picked up shares for my own portfolio at $12.50, on the way down.

But shares are finally moving higher, helped in part by a great earnings report last week. For Q1 2017, Smart Sand reported:

• Revenues of $25.0 million, up 141% from Q1 2016 and $6.9 million above estimates
• Tons sold of approximately 558,500, an increase of 103% sequentially
• Cash from operations of $3.8 million, versus $2.8 million in Q1 2016
• Net Income of $1.0 million, or $0.02 per share
• Adjusted EBITDA of $3.7 million

As I noted when I made the Buy recommendation, the other major players in the fracking sand space all have weaker balance sheets than Smart Sand, which is essentially debt-free. It exited the quarter with $73 million in cash and cash equivalents, a $25 million improvement over the previous quarter. 

The share price jumped about 10% on the earnings release and has now rallied 30% in under two weeks. According to S&P Capital IQ the median target price among the six analysts covering the company is $20, which would imply a 50% upside from today’s closing price. 

Smart Sand is a more compelling buy today than it was a month ago when I first made the recommendation because its balance sheet is even stronger. The outlook for the hydraulic fracturing sand business is healthy for the next few years, and Smart Sand is well-positioned to benefit. Smart Sand remains a Buy up to $16.