The waste management industry has been in good shape. Amid the coronavirus-led lockdowns, there was a relative shift of waste production from industry and commercial centers to medical centers and residential areas. Now, with gradual resumption of business activities, industrial waste is likely to increase in the days to come.
The pandemic has strongly necessitated the proper disposal of trash. In fact, waste management companies are at an advantage as there has been a substantial increase in residential waste with the rise in the work-from-home trend and travel restrictions. Proper disposal of medical waste such as used masks, gloves, suits, syringes and other medical equipment has become a major concern for countries across the globe.
Government initiatives as well as stringent rules and regulations to advance sustainable waste management mechanisms and put a check on illegal dumping have also been aiding the industry.Rising environmental concerns, rapid industrialization, economic growth and increase in population are expected to increase non-hazardous waste. This should enhance business opportunities for waste management companies. Further, technology adoption and use of advanced collection and recycling solutions are picking up pace. New technologies in containers are helping companies enhance operational efficiency and save costs. High-tech containers now include odor reduction systems and capacity sensors.
According to a Allied Market Research report, the global waste management market is expected to reach $2,339.8 billion by 2027 from $2,080 billion in 2019, witnessing a CAGR of 5.5% from 2020 to 2027.
Clean-up companies generate stable revenues and cash flows from customers across diverse industries and pay out stable dividends. This makes waste management stocks robust defensive players.
4 Waste Management Stocks That Warrant a Look
Adding stocks from the industry looks like a smart move to enhance your portfolio as the pandemic rages on. The buoyancy in the industry is further confirmed by its Zacks Industry Rank #96, which places it in the top 38% of more than 250 Zacks industries. Additionally, the industry has gained 10.3% in the past six months.
Here we present four promising waste management stocks, which have witnessed upward estimate revisions in the past 90 days and had an impressive run on the bourses in the past six months. These stocks also have a solid four-quarter average earnings surprise history. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Clean Harbors, Inc. CLH: This Zacks Rank #1 Massachusetts-based company provides environmental, energy, and industrial services in North America.
Acquisitions have been helping the company expand its business across multiple lines of services. Consistency in rewarding its shareholders through share buybacks boosts investor confidence and earnings per share. Notably, cost-reduction efforts, productivity improvements, healthy mix of higher margin work and the two government-assistance programs have been aiding the company’s bottom line amid the COVID-19 pandemic.
Further, the company has raised its 2020 adjusted EBITDA guidance to the range of $530-$550 million from the previous guidance of $470-$500 million. Net income is anticipated to be $104-$130 million (previous guidance: $53-$84 million). Adjusted free cash flow is expected between $250 million and $270 million (previous guidance: $200 million and $230 million). Net cash from operating activities is projected between $405 million and $445 million (previous guidance: $355 million and $405 million).
The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 52.2% in the past 90 days. The company’s expected earnings growth rate for the year is 11.11%. The company has a trailing four-quarter earnings surprise of more than 100%, on average. The stock has rallied 17.8% in the past six months.
Clean Harbors, Inc. Price, Consensus and EPS Surprise
Republic Services, Inc. RSG: This Arizona-based Zacks Rank #2 (Buy) company provides non-hazardous solid waste collection, transfer, disposal, recycling, and environmental services in the United States.
The positive impact of acquisitions and average yield has been aiding the company’s top-line growth. The company is focused on increasing its operational efficiency by shifting to compressed natural gas collection vehicles and converting rear-loading trucks to automated-side loaders to reduce costs and improve profitability. The company continues to grow internally with the help of long-term contracts for the collection, recycling and disposal of solid waste materials. Consistency in dividend payments and share buybacks not only boost investor confidence but also positively impact earnings per share.
The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 7.9% in the past 90 days. The company’s expected earnings growth rate for the year is 1.2%. Additionally, it has a long-term (three to five years) expected earnings growth rate of 9.4%. The company has a trailing four-quarter earnings surprise of 15.1%, on average. The stock has rallied 16.2% in the past six months.
Republic Services, Inc. Price, Consensus and EPS Surprise
Waste Connections, Inc. WCN: This Canada-based Zacks Rank #3 (Hold) company provides waste collection, transfer, disposal, and recycling services in the United States and Canada.
Sequential improvement in solid waste volumes and increased recovered commodity values have been aiding the company’s top line. The company's focus on secondary and rural markets to garner a higher local market share is appreciable. The company has optimal asset positioning to generate higher profitability. Acquisitions have been helping in expanding global presence and strengthening its product portfolio.
Further, the company has hiked its quarterly dividend by 10.8%, from 18.5 cents per share to 20.5 cents per share. This reflects its 10th consecutive double-digit percentage increase since the initiation of dividend payment in 2010. The company paid out dividend of $49 million in the last reported quarter. Consistency in rewarding its shareholders through share buybacks and dividend payments boosts investor confidence and positively impact earnings per share.
The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 4.9% in the past 90 days. It has a long-term (three to five years) expected earnings growth rate of 9.13%. The company has a trailing four-quarter earnings surprise of 8.2%, on average. The stock has rallied 11.3% in the past six months.
Waste Connections, Inc. Price, Consensus and EPS Surprise
Waste Management, Inc. WM: This Texas-based Zacks Rank #3 company provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America.
The company continues to execute its core operating initiatives of focused differentiation and continuous improvement and instill price and cost discipline to achieve better margins. Strength across traditional solid waste business boost the company's cash and earnings. Successful cost-reduction initiatives have helped it achieve EBITDA growth. Shareholder-friendly moves boost investors' confidence and positively impact earnings per share.
Further, the company has hiked its quarterly dividend by 5.5%, from 54.5 cents per share to 57.5 cents per share. The company’s board has also approved a share repurchase authorization of up to $1.35 billion.
The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 3.4% in the past 90 days. It has a long-term (three to five years) expected earnings growth rate of 7.35%. The company has a trailing four-quarter earnings surprise of 3.4%, on average. The stock has rallied 10.5% in the past six months.
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Waste Management, Inc. (WM): Free Stock Analysis Report
Republic Services, Inc. (RSG): Free Stock Analysis Report
Clean Harbors, Inc. (CLH): Free Stock Analysis Report
Waste Connections, Inc. (WCN): Free Stock Analysis Report
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