The United States is one of the biggest generators of waste per capita worldwide. Because this volume of waste is a threat to the environment, it provides a massive opportunity for waste management companies.
Population growth has led to rapid urbanization and industrialization, which has led to extraordinary growth in solid waste volumes. During the worst of the COVID-19 pandemic, industries were idled, and consumer spending slowed. But with economic recovery now underway and vaccinations in full swing, the waste management industry may soon return to full scale operations. According to an Allied Market Research report, the global waste management market is expected to register a 3.4% CAGR to hit $2.48 trillion by 2030.
Given this backdrop, we think it could be wise to add quality waste management stocks Republic Services, Inc. (RSG), Waste Connections, Inc. (WCN), and Clean Harbors, Inc. (CLH) to one’s watchlist. These stocks have an overall rating of Strong Buy or Buy from proprietary rating system.
Republic Services, Inc. (RSG)
RSG in Phoenix, Arizona provides non-hazardous solid waste collection, transfer, disposal, recycling, and environmental services in the United Services. The company serves small-container, large-container, and municipal and residential customers. It is also involved in the processing and sale of old corrugated containers, old newsprint, aluminum, and glass.
On Dec.1, 2021, RSG announced the opening of Sacramento’s first organic pre-processing facility to help local communities divert food waste from landfills to be converted into renewable energy. RSG’s new facility will accept food waste from businesses in Sacramento County and produce organic material delivered to an anaerobic digestion facility that converts the material into usable energy.
RSG’s revenue increased 14% year-over-year to $2.93 billion for the third quarter, ended Sept. 30, 2021. The company’s net income increased 34.7% year-over-year to $350.30 million. Its EPS came in at $1.10, up 35.8% year-over-year.
Analysts expect RSG’s EPS for its fiscal year 2021 to increase 16% year-over-year to $4.13. Its revenue for the quarter ending Dec. 31, 2021, is expected to increase 11.6% year-over-year to $2.87 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 38.3% in price to close yesterday’s trading session at $130.64.
RSG’s POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Momentum and a B grade for Stability, Sentiment, and Quality. It is ranked #2 of 17 stocks in the B-rated Waste Disposal industry. Click here to see the ratings of RSG for Growth and Value.
Waste Connections, Inc. (WCN)
WCN is a Woodlands, Tex.-based integrated solid waste services company that provides non-hazardous waste collection, transfer, and disposal services, along with recycling and resource recovery. The company offers a range of commercial waste collection, recycling, shredding service, dumpster rental, intermodal container services, and portable toilets services.
On Sept. 1, 2021, WCN announced that it had acquired solid waste services company E.L. Harvey & Sons Inc., with operations in Massachusetts. Harvey will add approximately $110 million in revenue to WCN’s books and help it expand to areas in Central Massachusetts, Eastern Massachusetts, and Southern New Hampshire.
For its fiscal third quarter, ended Sept.30, 2021, WCN’s revenue increased 14.9% year-over-year to $1.59 billion. The company’s operating income increased 23.6% year-over-year to $285.14 million. And its net income for the nine months ended Sept. 30, 2021, increased 515.7% year-over-year to $452.06 million.
For its fiscal 2022, analysts expect WCN’s EPS and revenue to increase 15.5% and 10.4%, respectively, year-over-year to $4.69 and $8.49 billion. The stock has gained 24.2% in price over the past year to close yesterday’s trading session at $127.65.
WCN’s strong fundamentals are reflected in its POWR Ratings. Our proprietary rating system has given WCN an overall rating of B, which equates to a Buy. WCN has an A grade for Momentum and Stability and a B grade for Sentiment and Quality. It is ranked #4 in the Waste Disposal industry. To see the additional ratings of Growth and Value, click here.
Clean Harbors, Inc. (CLH)
Norwell, Mass.-based CLH is a provider of environmental and industrial services throughout North America. The company re-refines and recycles used oil and provides parts cleaning and related environmental services to commercial, industrial, and automotive customers. The company operates through the Environmental Services and Safety-Kleen segments. It also sells automotive and industrial cleaning products.
On Oct. 8, 2021, CLH announced the acquisition of HydroChemPSC, which provides industrial cleaning, specialty maintenance, and utility services. Chairman, President, and CEO of CLH Alan S. McKim said, “We expect HPC’s automation and hands-free technology capabilities to drive improvements in safety, and the acquisition to create multiple cross-selling opportunities that will drive incremental waste into our network.”
CLH’s revenue for its fiscal third quarter, ended Sept. 30, 2021, increased 22% year-over-year to $951.50 million. The company’s adjusted net income came in at $62.21 million, representing a 24.6% increase year-over-year. Its adjusted EPS increased 26.6% year-over-year to $1.14.
Analysts expect CLH’s EPS and revenue for the quarter ending March 31, 2022, to increase 76.2% and 29.5%, respectively, year-over-year to $0.74 and $1.05 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 20.4% in price to close yesterday’s trading session at $97.89.
CLH’s POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. It has an A grade for Momentum and a B grade for Value and Quality. It is ranked first in the Waste Disposal industry. Click here to see the additional ratings of CLH for Growth, Stability, and Sentiment.
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RSG shares were trading at $129.86 per share on Friday afternoon, down $0.78 (-0.60%). Year-to-date, RSG has declined -6.88%, versus a -2.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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