Companies in the environmental service space were dealt a major setback by the COVID-19  pandemic. But given the nature of the services companies in this space provide they  are expected to witness steady demand in the near- to mid-term. This is because most industries are resuming their operations as the effects of mass vaccination programs kick in.

As industrial activities come back to life as the deadly virus is brought under control the generation of waste generated is expected to increase. This will result in a resumption in the demand for services provided by companies such as Waste Management, Inc. (WM) and Clean Harbours, Inc. (CLH).

So, we believe that against this backdrop, betting on these stocks could be rewarding.

Waste Management, Inc. (WM)

Based in Houston, Texas, WM is a provider of waste management environmental services. The company operates through two segments — Solid Waste and Other. The company’s  Other segment includes its Strategic Business Solutions (WMSBS) organization, its landfill gas-to-energy operations, and third-party subcontract and administration services managed by its Energy and Environmental Services and WM Renewable Energy organizations, along with recycling, materials processing and recycling commodities services.

The company’s operating revenues have increased 5.7% year-over-year to $4.07 billion for the fourth quarter ended, December 31, 2020. Its adjusted net income has increased 3.4% sequentially to $481 million. WM’s  adjusted operating EBITDA came in at $1.14 billion, up 1.9% year-over-year. The company’s adjusted EPS came in at $1.13, up 3.7% sequentially.

A consensus EPS estimate of $1.15 for the quarter ending June 30, 2021 represents a 30.7% rise year-over-year. Moreover, WM has surpassed the consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $16.87 billion for the fiscal 2021 represents a 10.9% rise from the same period last year.

Last month , the company declared a quarterly cash dividend of $0.58 per share payable on March 26, 2021. On the same date, WM  was  recognized by Ethisphere, a global leader in defining and advancing the standards of ethical business practices, as one of 2021’s World’s Most Ethical Companies. WM has also been recognized in Fortune magazine’s list of World’s Most Admired Companies for the third year in a row, as announced by the company in  The stock has gained 35.1% over the past three years and closed yesterday’s trading session at $115.52.

WM’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

The stock has a B grade for Stability and Quality. We have also graded WM for Growth, Value, Momentum, and Sentiment. Click here to access all of WM’s ratings.

WM is ranked #3 of 17 stocks in the Waste Disposal Industry.

Clean Harbours, Inc. (CLH)

Founded in 1980, CLH provides environmental, energy and industrial services in North America. The company operates through six segments — Technical Services, Industrial Services, Field Services, Safety-Kleen, Oil and Gas Field Services, and Lodging Services. CLH is also a re-refiner and recycler of used oil and a provider of parts cleaning and related environmental services to commercial, industrial and automotive customers in North America.

The company’s revenues have increased 2.2% sequentially to $796.19 million for the fourth quarter, ended December 31, 2020. The company’s income from operations were  $61.74 million, which represents an improvement of more than 18% year-over-year. CLH’s adjusted net income was  $35.03 million, up 50.4% year-over-year. Its adjusted EPS increased 50% year-over-year to $0.63.

A consensus EPS estimate of $0.63 for the quarter ending June 30, 2021 represents a 21.2% improvement year-over-year. Also,  CLH has surpassed the consensus EPS estimates in each of trailing four quarters. The consensus revenue estimate of $808.54 million for the same quarter, ending June 30, 2021, represents a 15.7% rise from the same period last year.

In May 2020, the National Association for Stock Car Auto Racing (NASCAR) expanded its partnership with the company to ensure prevention of infectious disease and for decontamination needs. CLH disinfected and decontaminated Darlington Raceway to ensure the safety of all drivers, crew and personnel for the coming races. The stock has gained 48.8% over the past six months and closed yesterday’s trading session at $85.42.

CLH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary ratings system.

The stock has an A grade of A for Sentiment, and B for both Value and Quality. We have also graded CLH for Growth, Stability and Momentum. Click here to access all of CLH’s ratings.

The stock is currently ranked #1 in the same industry.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

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WM shares were unchanged in after-hours trading Friday. Year-to-date, WM has gained 0.64%, versus a 2.61% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...

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