The global waste disposal market's prospects looks stable, thanks to rising demand for enhanced waste management and technical advancements in garbage disposal systems. Also, rising environmental awareness and government measures to promote efficient waste disposal methods will propel market expansion even further.
Therefore, quality waste disposal stocks Republic Services, Inc. (RSG), Clean Harbors, Inc. (CLH) and Concrete Pumping Holdings, Inc. (BBCP) could be wise additions to your portfolio now.
Before delving deeper into their fundamentals, let’s discuss what’s happening in the waste disposal industry.
The United States Environmental Protection Agency (EPA) announced a $100 million investment from President Biden’s Investing in America program to develop recycling infrastructure and waste management systems across the country, the EPA’s largest recycling investment in 30 years.
Under the newly formed Solid Waste Infrastructure for Recycling funding opportunity, the EPA selected 25 communities to receive grants totalling more than $73 million. Also, the EPA is providing around $32 million to states and territories to improve solid waste management planning, data collecting, and plan execution.
The waste management industry is expected to grow at a 6.6% CAGR until 2032, reaching $1.36 trillion. This increase might be due to increasing urbanization and industrialisation, which result in increased garbage generation.
Moreover, the e-waste management market is projected to grow at a 14.4% CAGR until 2030. Due to rising electronic device usage, the e-waste management system industry, which incorporates stakeholders such as manufacturers, recyclers, refurbishers, and consumers in suitable disposal procedures, has developed dramatically.
In light of these encouraging trends, let’s look at the fundamentals of the three top-rated Waste Disposal stocks, beginning with number 3.
Stock #3: Republic Services, Inc. (RSG)
RSG offers environmental services in the United States. It is involved in the collection and processing of recyclable, solid waste, and industrial waste materials; transportation and disposal of non-hazardous and hazardous waste streams; and other environmental solutions.
RSG’s trailing-12-month EBITDA margin of 28.55% is 111% higher than the 13.53% industry average. Likewise, its trailing-12-month CAPEX / Sales of 10.54% is 259% higher than the industry average of 2.94%.
For the fiscal second quarter, which ended June 30, 2023, RSG’s revenue increased 9.1% year-over-year to $3.73 billion, while its adjusted EBITDA grew 10.5% from the year-ago value to $1.12 billion.
The company’s net income and EPS amounted to $427.40 million and $1.35, up 14.9% and 15.4% from the prior-year quarter, respectively.
The consensus revenue estimate of 14.86 billion for the year ending December 2023 represents a 10% increase year-over-year. Its EPS is expected to grow at 8.7% to $5.36 for the same period. It surpassed EPS estimates in all the four trailing quarters. RSG’s shares have gained 15.4% over the past nine months to close the last trading session at $146.47.
RSG’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
RSG also has a B grade for Stability and Quality. It is ranked #3 out of 14 stocks in the B-rated Waste Disposal industry. Click here for the additional POWR Ratings for Value, Growth, Sentiment, and Momentum for RSG.
Stock #2: Clean Harbors, Inc. (CLH)
CLH provides industrial and environmental services across North America. The company operates through two segments: Environmental Services; and Safety-Kleen Sustainable Solutions (SKSS).
CLH’s trailing-12-month levered ROCE of 21.24% is 56.3% higher than the 13.59% industry average. Its trailing-12-month ROTA of 6.66% is 31.9% higher than the 5.05% industry average.
CLH’s revenue grew 3.1% year-over-year to $1.40 billion in the second quarter that ended June 30, 2023. Its total current liabilities came in at $914.42 million for the period that ended June 30, 2023, compared to $1.02 billion for the period that ended December 31, 2022.
Also, its total other liabilities came in at $3.08 billion, compared to $3.19 billion for the same period.
Street expects CLH’s revenue to increase 5.8% year-over-year to $5.47 billion for the year ending December 2023. Its EPS is expected to grow marginally year-over-year to $7.19 for the same period. It surpassed EPS estimates in all the four trailing quarters. Over the past year, the stock has gained 46.8% to close the last trading session at $167.54.
CLH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #2 in the same industry. It has a B grade for Value, and Quality. To see additional CLH’s ratings for Value, Momentum, Sentiment and Stability, click here.
Stock #1: Concrete Pumping Holdings, Inc. (BBCP)
BBCP provides concrete pumping and waste management services in the United States and the United Kingdom.
BBCP’s trailing-12-month EBIT margin of 13.91% is 42.6% higher than the 9.75% industry average. Its trailing-12-month gross profit margin of 40.74% is 34.4% higher than the 30.31% industry average.
In the third quarter that ended July 31, 2023, BBCP’s revenue increased 15.5% year-over-year to $120.67 million. Its gross profit increased 18% year-over-year to $49.48 million, while its income from operations came in at $19.55 million, up 38.8% year-over-year.
Analysts expect BBCP’s revenue to increase 10.1% year-over-year to $441.73 million for the year ending October 2023. Its EPS is expected to come in at $0.48 for the same period. The stock has gained 42.5% over the past nine months to close the last trading session at $8.85.
It’s no surprise that BBCP has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has a B grade for Growth, Stability, Sentiment, Momentum and Quality. It is ranked first in the same industry.
Beyond what is stated above, we’ve also rated BBCP for Value. Get all BBCP ratings here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
RSG shares were trading at $146.85 per share on Thursday afternoon, up $0.38 (+0.26%). Year-to-date, RSG has gained 15.06%, versus a 15.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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