Although the U.S. market appears to be crumbling, there are
still a variety of market segments that can be potential hits with
investors over the long term. This could be especially true in some
segments which have both cyclical and discretionary
characteristics, specifically the waste management industry.
No matter what is happening in the broader economy, trash will
be produced and in vast quantities. This presents a steady
opportunity for a variety of companies in order to manage this flow
and dispose of it properly (
The Comprehensive Guide to Consumer Staples
ETFs
).
However, there is also a discretionary aspect to the segment as
well; as more is produced and consumed, more trash is invariably
made, adding to the demand for those in the industry. Thus, waste
management firms are also heavily correlated to growth levels
despite their relatively stable nature otherwise.
The U.S waste industry is divided into two segments, namely
hazardous waste and non-hazardous waste. Most hazardous waste
results from various manufacturing processes and poses threats to
public health or the environment. Non-hazardous waste is divided
into several categories, including municipal solid waste and
several kinds of industrial waste.
Management of both types plays a very important role in any
economy as it involves removal of tons of goods in a time efficient
manner that also keeps the product relatively segregated and safe
from the general populace. Due to this, there are often significant
barriers to entry, either in terms of switching costs, network
effects, or regulatory hurdles, helping to keep the sector a solid
long term play for patient investors (see more in the
Zacks ETF
Center
).
Thanks to these trends, some investors are looking to push into
this sector despite its relatively lackluster performance as a way
to capture gains for the long term. For investors seeking to play
this trend in ETF form, there is currently one solid choice that
could make for an interesting pick, which we have highlighted
below:
Market Vectors Environmental Services ETF (
EVX
)
Market Vectors Environmental Services ETF seeks to replicate the
price and yield performance of the NYSE Arca Environmental Services
Index. The fund was initiated in October of 2006 and since
then has managed to build assets under management of just $19
million (see
Ten Biggest U.S. Equity Market ETFs
).
The product holds a total of 21 securities in which Stericycle,
Inc. (
SRCL
), Republic Services, Inc. (
RSG
) and Waste Management, Inc. (
WM
) hold the top three positions. In terms of sector exposure,
Commercial & Professional Services occupy the top position with
65.9% of investment while Capital Goods and Utilities take the
second and third spots.
From market capitalization perspective, the fund tilts towards
large caps. EVX charges an expense ratio of 55 basis points from
the investor and currently has a Zacks ETF Rank of 3 or 'Hold' (
Guide to the 25 Cheapest ETFs
). Meanwhile, performance has been lackluster, pacing the
overall market and losing about 2.2% so far in 2012.
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MKT VEC-ENV SVC (EVX): ETF Research Reports
REPUBLIC SVCS (RSG): Free Stock Analysis Report
STERICYCLE INC (SRCL): Free Stock Analysis
Report
WASTE MGMT-NEW (WM): Free Stock Analysis Report
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