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Tickers in this Article: CBT, ICON, MIND
As first half earnings are released, some companies are showing the value and promise of solid growth moving forward, writes Richard Moroney of Upside.

Mitcham Industries (MIND)
The largest lessor of seismic equipment in the world, Mitcham primarily serves the oil and gas industry. The company has benefited from a recovery in oil prices and related uptick in capital spending by energy producers.

Few energy companies can match Mitcham’s operating momentum. July-quarter earnings are expected to be 10 cents, up from a loss of a penny.

For fiscal 2012 ending January, the consensus profit estimate is $1.42 per share, up from 45 cents. (The consensus was $1.01 just two months ago.) Revenue is expected to surge 27%, to $90 million.

Among providers of oil and gas equipment, Mitcham’s Overall score of 97 is tied for first with RPC (RES). Mitcham sports above-average scores across all six categories, with superior scores for Earnings Estimates (100) and Performance (98).

Mitcham’s sales and earnings are highly sensitive to the level of capital spending by energy companies. But considering the company’s earnings momentum and favorable industry outlook, the stock appears cheap at 14 times current-year profit estimates.

Iconix Brand (ICON)
This company operates a highly profitable licensing business, a model that lacks inventory risk and is easily scalable. In many cases, Iconix receives guaranteed minimum royalties should sales fall short of specified targets, shielding it against consumer skittishness and cost inflation.

Direct-to-retail licensees agreements with Wal-Mart, Target, Kohl’s, and Sears/Kmart accounted for 35% of Iconix’s revenue last year.

Once known for its footwear and chain of retail stores, Iconix shuttered both operations to focus exclusively on licensing in 2004. Since then, the company has produced spectacular growth, with revenue and operating income up more than tenfold in the past five years.

Of Iconix’s 17 consumer brands, it has acquired 15 within the last seven years. Iconix has also taken large stakes in additional brands, including Peanuts, while forming joint ventures to stretch its presence into China, Europe, and Latin America. Sales from abroad accounted for 14% of 2010 revenue, and management sees that slice reaching 17% this year.

Free cash flow has increased in eight of the last nine quarters. For 2011, management targets free cash flow of roughly $170 million, up 5%, on about 8% higher revenue. Scoring in the top 25% of our research universe for five of six Quadrix categories, Iconix has a good record of meeting expectations.

Cabot (CBT)
A specialty-chemicals company, Cabot reported June-quarter earnings per share excluding items of 98 cents, up 9% and above consensus estimates. Revenue surged 17% to $883 million, easily beating the three-analyst consensus of $780 million.

Separately, the company plans to expand production capacity by 25% at its fumed silica facility in Wales. Cabot has a long-term partnership with Dow Corning to produce silicones.

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